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Can filing for bankruptcy halt wage garnishment?

On Behalf of | Apr 17, 2024 | Bankruptcy

When facing financial difficulties, people may find themselves subject to wage garnishment. This involves their employer withholding a portion of their wages to repay debts. For many, this can exacerbate financial strain and make it even more challenging to meet basic expenses.

In such situations, filing for bankruptcy may be worth considering to stop wage garnishment and regain control over one’s finances.

Bankruptcy and wage garnishment

Filing for bankruptcy can indeed stop wage garnishment in many cases. When someone files for bankruptcy, an automatic stay goes into effect. This prohibits creditors from pursuing collection actions, including wage garnishment. This means that wage garnishment must cease immediately upon filing for bankruptcy, providing relief from ongoing financial pressures.

Types of bankruptcy

The effectiveness of bankruptcy in halting wage garnishment depends on the type of bankruptcy filed. Chapter 7 bankruptcy may involve the sale of non-exempt assets to repay creditors. While an automatic stay still takes effect in Chapter 7 bankruptcy, it may not provide long-term relief if the individual’s debts are not completely  discharged. In contrast, Chapter 13 bankruptcy allows people to reorganize their debts and establish a repayment plan over three to five years, which might give more sustainable relief from wage garnishment.

Considerations and limitations

Filing for bankruptcy is not a cure-all solution for financial problems. Bankruptcy can have long-term consequences, including damage to credit scores and difficulty obtaining future credit. Also, certain types of debts, such as child support payments, are not dischargeable through bankruptcy and may continue to be subject to wage garnishment even after filing.

While filing for bankruptcy can halt wage garnishment and provide relief from mounting debt, it is important to consider the implications before proceeding.