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Bankruptcy is an effective method to end wage garnishment

On Behalf of | Sep 12, 2022 | Bankruptcy

Wage garnishment happens when you owe on a debt and the creditor gets a legal order saying that your employer has to set aside part of your wages to pay that debt. From the time that this is ordered, you have no more control over the money. It is simply deducted from your paycheck before you are paid and it is sent to the creditor.

This can be highly detrimental to every aspect of your life. You may feel that you can’t even afford to keep food on the table or that you’re now working for a much lower wage. The good news is that bankruptcy can be a tactic to stop wage garnishment.

An automatic stay

This starts with the use of an automatic stay. This is a legal order saying that other financial actions have to stop while the bankruptcy case is proceeding. People often use this in foreclosure cases, for instance. They just want to put a pause on the foreclosure until the bankruptcy is over. You can do the same thing with the automatic stay if your wages have been foreclosed.

Long-term options

The problem with an automatic stay is that it ends when the bankruptcy case is over. This makes people think that it’s not an effective way to put an end to wage garnishment, which is simply going to pick back up after that case ends.

But the truth is that you can find long-term solutions. For instance, maybe you’re filing for Chapter 13 bankruptcy. This creates a repayment plan. The money that you owed is going to be bundled into this plan, and you can make monthly payments that go to the creditors. This puts an end to the wage garnishment because your debt is being addressed in a different way.

If you’re filing for Chapter 7 bankruptcy, on the other hand, then you have to liquidate assets and some of your debts can be discharged. If the debt that was tied to the garnishment is one of the ones that is discharged or eliminated, or if it is paid back with the money from the liquidated assets, then the wage garnishment will also stop.

You can see how useful this tool is for financial issues, so be sure you know exactly what steps to take.

 

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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 23 years.