Wage garnishment can be particularly stressful for Indiana citizens who are already having trouble managing their payments. Once a creditor gets a court order, they can actually go after money that the debtor receives as part of their paycheck. This can make paying for things like rent or groceries extremely hard. However, there may be hope through bankruptcy, which can relieve many wage garnishment problems.
One of the most effective tools when filing for bankruptcy is called the automatic stay.
What is the automatic stay?
Once the debtor declares bankruptcy, there is an automatic injunction on all kinds of collections. This is known as the automatic stay. Once the debtor files for bankruptcy, creditors are not allowed to make any collection efforts on behalf of themselves, including wage garnishment.
In most cases, the garnishment has to be stopped once the bankruptcy filing is made before the court. The employer is obligated by law to stop holding back money as a result of garnishment from creditors.
For people struggling financially and receiving reduced salaries, this provision can be really helpful.
What types of garnishments can bankruptcy stop?
The following debts can usually prevent garnishment proceedings:
- Credit card debts
- Healthcare bills
- Personal debts
- Civil judgments that fall into this category
- Amounts owing on collection accounts
In many cases, the above debts can be discharged during a bankruptcy proceeding, thus relieving you of the obligation to pay back these debts.
A bankruptcy under both Chapter 7 and Chapter 13 can cause an automatic stay on the majority of wage garnishments.
Some garnishments may continue
Although bankruptcy can be quite effective, there are some cases when it cannot stop the garnishment of wages. There are certain types of obligations that fall into the category of being specially protected by the government, and thus, they are still enforced in case of bankruptcy.
For instance, the following obligations are not halted by bankruptcy:
- Support for children
- Support for one’s spouse or former spouse
- Tax debts
- Fines for committing a crime
These obligations are viewed differently since priority is given to the fulfillment of such obligations.
Can you recover garnished wages?
In certain cases, some of the money that was garnished prior to your bankruptcy can be recovered. However, whether this is an option depends on specific criteria, such as how much had been seized from you at that time.
This could be a complicated matter from a legal standpoint, but in some cases, it may be possible to recover funds under certain circumstances.
Chapter 7 versus Chapter 13
Chapter 7 bankruptcy is meant to wipe out eligible debts fairly fast. Most people can go through the process in a few months’ time.
Chapter 13 bankruptcy entails a repayment schedule over a period of three or five years. It would be beneficial to those whose mortgages or auto loan payments have lapsed and would like to avoid garnishment proceedings for their wages.
Deciding which bankruptcy process works best depends on several factors, including your finances.
Talk to a Danville, IN, Bankruptcy Lawyer Today
Chris Arrington represents the interests of debtors whose wages are being garnished. Bankruptcy can help you keep your wages and discharge your debts. Call our office today to schedule an appointment, and we can begin preparing your case right away.