Wage garnishment is a harsh type of debt collection that can begin quickly and with little warning. Suddenly, a portion of your paycheck is diverted to creditors, leaving you struggling to cover basic expenses like rent, utilities and groceries. In Georgia, once a court order is obtained, creditors usually can garnish up to 25 percent of your disposable earnings, which are the amount left over after such deductions as taxes and Social Security. Worse, garnishment can launch a vicious spiral: reduced income leading to missed payments on other debts, thereby leading to more collection activity.
In these situations, bankruptcy can offer a lifeline. Filing a bankruptcy petition triggers an immediate automatic stay, which halts garnishment and prevents creditors from taking additional wages. The automatic stay also protects debtors from eviction, having their utilities cut off and undergoing foreclosure of their home. This protection applies whether you file a Chapter 7 or a Chapter 13.
Chapter 7 is often the fastest way to stop garnishment and eliminate the underlying debt. Once the case is filed, the garnishment stops and you can discharge credit card balances, medical bills, personal loans and other unsecured debts that led to the judgments against you.
Chapter 13 may be appropriate for individuals who need to catch up on secured debts or who have income or assets that make Chapter 7 unavailable. In Chapter 13, the garnishment stops and you repay a portion of your debts through a structured three- or five-year plan, often at a fraction of the original amounts outstanding.
In some cases, bankruptcy can help you recover wages already garnished. If a creditor received more than a certain amount within the 90 days prior to the bankruptcy filing, it may be considered a preferential payment and thus subject to recovery.
However, filing for bankruptcy will not stop all garnishments. Debts based on such obligations as child support and spousal support are not subject to the automatic stay. What’s more, if you have filed for bankruptcy within the previous year, the automatic stay will last for only 30 days unless extended by court order. If you have filed for bankruptcy two or more times in the past year, there is no stay at all unless the court imposes one. Finally, a creditor may ask the court to lift the automatic stay based on a stated cause, such as that you allegedly filed for Chapter 13 relief in bad faith.
Bankruptcy exists to give people a chance to stop aggressive collection efforts and rebuild financial stability. If you are a Georgia consumer facing garnishment, the sooner you speak with an experienced bankruptcy attorney, the more options you may have for protecting your income.
Jeff Field & Associates, with offices conveniently located in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur, can help you stop a Georgia wage garnishment and other debt collection measures. Call us at 404-381-1278 or contact us online for a free initial consultation.