Imagine the stress of opening your paycheck only to find a significant portion missing. This is the reality for many facing wage garnishment. It can feel like a never-ending cycle of financial strain, leaving you wondering if there’s a way out. For many, bankruptcy is the answer. Let’s explore how this process works.
What is wage garnishment?
Wage garnishment occurs when a court orders your employer to withhold a portion of your paycheck to pay off a debt. This can happen due to the following reasons:
- Unpaid taxes
- Child support
- Student loans, or
- Other debts
The amount garnished can vary, but it often leaves individuals needing help to cover their basic living expenses. The emotional toll can be overwhelming, as each paycheck reminds you of the debt you’re trying to escape.
Bankruptcy and wage garnishment
When you file for bankruptcy, an automatic stay goes into effect. This powerful tool halts most collection activities, including wage garnishment. For many, this immediate relief offers a temporary reprieve from financial stress.
Chapter 7 bankruptcy liquidates your non-exempt assets to pay off your debts. Once the bankruptcy process is complete, many debts are discharged. This discharge can permanently stop wage garnishment for those debts.
Chapter 13 bankruptcy, however, involves creating a repayment plan to pay off your debts over three to five years. During this period, the automatic stay prevents wage garnishment, allowing you to make manageable payments according to your plan. Once you complete the repayment plan, any remaining qualifying debts are discharged.
Wage garnishment can seem like an impossible challenge, but bankruptcy offers a path to relief.
If you’re considering filing for bankruptcy to stop wage garnishment or for other reasons, seeking legal advice would help. A qualified attorney can guide you through the process, ensuring you make informed decisions that best suit your financial situation.
