When you have serious debt, you may feel like you will never get ahead. Even if you pay the bare minimum on all your bills, you can still fall behind. When that happens, your creditors may resort to extreme measures to get their money.
Perhaps one of your creditors secured a court order to garnish your wages. Wage garnishment is only going to make your struggle to pay bills worse. You wonder if it is time to file for bankruptcy, but you are unsure if that will stop wage garnishment. Here is what you need to know about wage garnishment and bankruptcy.
An automatic stay starts after a bankruptcy filing
When you file for bankruptcy, an automatic stay goes into effect. This prevents creditors from collecting from you, and it stops wage garnishment. A stay starts the moment you file your bankruptcy paperwork, and almost no creditors can legally take any of wages as long as the stay is in place.
There is an exception, however. If your wages are being garnished to pay for child or spousal support, garnishment continues during your bankruptcy case. This debt cannot be forgiven in bankruptcy proceedings, so garnishment can continue.
Chapter 7 bankruptcy
If you qualify for Chapter 7 bankruptcy, almost all your debts will be discharged in bankruptcy proceedings. Since your debts are discharged, there will be no need for wage garnishment.
Chapter 13 bankruptcy
When filing for Chapter 13 bankruptcy, you do not discharge your debts, but you do create a payment plan that lasts for three to five years. During this time, you pay off your debt through the plan. This also halts wage garnishment, since you agree to pay off debt through the court-ordered payment plan.
If your wages are being garnished by a creditor, filing for bankruptcy can provide a good solution to halt these payments. It also allows you to discharge or restructure your debt and put an end to creditor harassment.