Wage garnishment is when the court orders your employer to refrain from granting a specific amount of your salary in order to send it to your creditor. This can be stressful, especially if you rely on the entire amount of your paycheck to make ends meet. Fortunately, your bankruptcy attorney can advise you on how to use Chapter 7 bankruptcy law to prevent wage garnishment.
Can You Prevent Wage Garnishment by Filing for Chapter 7 Bankruptcy?
Filing for Chapter 7 bankruptcy prevents salary garnishment through an injunction known as an automatic stay. This automatic injunction is sanctioned by the U.S. Bankruptcy Code and keeps creditors, government entities, and collections agencies from collecting from you while your bankruptcy case is still underway.
The automatic stay allows you to get your finances in order. It also allows the trustee handling your case to look over your bankruptcy debts, petition, income, and assets.
When Is the Automatic Stay Effective?
The automatic stay comes into effect after filing for bankruptcy. Therefore, creditors are required to stop garnishing your salaries or any collection activities when they learn of your bankruptcy.
The creditors will receive a notification from the bankruptcy court where you have filed for bankruptcy or from your Chapter 7 bankruptcy attorney. If they do not obey the court's order, they face charges of contempt of court.
Bankruptcy Won't Stop All Garnishments
The automatic stay is not applicable to all types of debts or obligations. For example, an automatic stay cannot prevent a garnishment if you are required to make payments like alimony or child support.
If you want to stop garnishments for domestic support responsibilities, your best alternative is to file for Chapter 13 bankruptcy. However, under Chapter 13 bankruptcy, you are required to pay for those domestic support responsibilities within a 5-year plan. Therefore, even though a wage garnishment stops, you will be required to deliver your plan payments.
Can You Stop Wage Garnishment With Multiple Bankruptcy Filings?
If you filed for bankruptcy in the last year and you were turned down, your automatic stay will be effective for only 30 days. However, your Chapter 7 bankruptcy attorney can ask the court to increase the timeframe provided you prove that you were filing in good faith.
Courts do not grant an automatic stay for persons who file for Chapter 7 bankruptcy for the third time after filing twice in the same year. This law prevents individuals and businesses from exploiting the automatic stay for their own selfish reasons.
For more information, contact a law firm that specializes in bankruptcy law, such as Ozment Law PA.
