How Does Filing a Chapter 13 Bankruptcy Stop a Wage Garnishment?

A common question I am asked is “How does filing bankruptcy stop a wage garnishment?”

One of the many purposes of the bankruptcy law is to protect people for aggressive creditor collection efforts. The Bankruptcy Court recognizes that people need money for housing, food, clothing and daily living expenses. If one creditor is taking 25% of a person’s gross income, obviously, that gives someone 25% less money to live on. That can make paying rent and buying food difficult.

Therefore, under one section of the Federal Bankruptcy Code, Congress provides the following law to help people who file bankruptcy:

Under 11 U.S.C. Subsection 362, any act to collect, assess, or recover a claim against a debtor or attempt to enforce a judgment against the debtor by an entity, is automatically stayed and garnishment must immediately cease. Further, the commencement or continuation of a judicial or administrative or other action or proceeding against the debtor, is also automatically stayed under this Subsection.

At the moment the bankruptcy case is filed with the Court, the Automatic Stay provision goes into effect and creditors are immediately prevented from continuing with an existing garnishment and they are also stopped from starting a new garnishment (there are many other factors that come into play, but, at the time the case is filed, this is true.)

Our firm has been helping people stop wage garnishment for 32 years. Give us a call to schedule your free initial consultation and explore your options. For a lot of people, filing a Chapter 13 bankruptcy is a great way to stop garnishments and reorganize your debt so that you have money to live on.