If you fall behind in paying debts, you may be subject to a wage garnishment. A creditor might obtain a court order requiring your employer to impound a portion of your wages or salary each pay period and to send it to the creditor. Garnishments can be devastating as they can leave you with insufficient funds left to pay for food, health care and other basic expenses and can snowball into even bigger problems, such as losing your home.
One common method of blocking garnishments is to file bankruptcy, which triggers an automatic stay. This is a court order that bars creditors from collecting debts or enforcing obligations while the bankruptcy case is pending. Upon receiving a court notice that a bankruptcy petition has been filed, creditors must cease all collection efforts against any of the debtor’s assets. The automatic stay remains in force until it is lifted by an order from a bankruptcy judge or it expires by operation of law. If a creditor fails or refuses to comply with an automatic stay, they may be subject to significant penalties and sanctions.
In most cases, the automatic stay will suspend wage garnishments. The debtor’s employer is given notice of the bankruptcy case and is ordered to stop garnishment until the stay is lifted or a further order is issued by the court. In most consumer bankruptcy cases, the underlying debt will be discharged. If the debt is discharged in bankruptcy, then the garnishment is dissolved permanently. If the underlying debt is not discharged, the employer may be required to resume the garnishment when the automatic stay is lifted or expires.
Filing bankruptcy will not block all wage garnishments. This is because certain types of debt are not dischargeable in bankruptcy. For example, the law does not allow for discharge of child support payments or — except in rare cases — student loan payments. When a person’s debts are primarily non-dischargeable, filing bankruptcy is not a solution to the debtor’s financial problems. A debtor facing wage garnishment or other collection actions should consult an experienced bankruptcy attorney to review all viable debt relief options.
Jeff Field & Associates assists wage earners in bankruptcy cases from six offices in the Atlanta, Marietta and Athens areas of Georgia. If you are facing a wage garnishment or another debt related issue, feel free to contact us online or call 404-381-1278 for an initial consultation.
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