Wage Garnishment and Bankruptcy

Bankruptcy Attorney

There are many reasons why an individual may decide to go bankrupt, but one of the biggest is the constant harassment of the bill collectors. Even worse is when they have taken action such as garnishment of wages. Although this is a recourse for some creditors they still have to follow the rules.

Garnishment Rules

There are some sources of income that they are not allowed to touch. Each State has its own specific laws that the creditor must follow when they want to take garnishment action. There are Federal as well as State laws. There are distinct rules that have to be followed under the Federal guidelines that determine the amount that can be taken. Which takes precedence will depend on the lower amount that will result in the garnishment. Normally income such as social insurance or unemployment insurance benefits cannot be touched, for example.

The creditor has got to go through the legal process in order for this type of action to take place. Once they have gone through the legal proceeding, a writ concerning the garnishment has to be served both on the individual owing the money as well as the employer.
One of the biggest concerns of individuals that are in financial difficulty have is that their wages are going to be garnisheed. This is an action that can take place quickly and can be another source of great concern for the financially strapped individual.

The laws are different for each state when it comes to allowing wage garnishment. For example, in Texas as well as a few other states creditors may not be allowed to garnish the wages unless there are special circumstances. These are usually for child or spouse support that is in arrears or student loans or for federal taxes that are owed.

Before you get into this financial state you may want to seriously consider bankruptcy. The first step that you can take is to speak to a Dayton bankruptcy lawyer to see if this form of debt relief is best suited for your specific circumstances. They will also be able to advise you as to which chapter of the bankruptcy relief that you would be able to qualify for.

There are many laws that pertain to wage garnishment as there are many laws that affect the bankruptcy chapters. Any individual that is in financial difficulty finds that this can be quite overwhelming, and is difficult to understand without having professional advice.

Bankruptcy is meant to provide debt relief for individuals that have no other recourses, and it is a way for them to get financially stable once again. It is an effective way for putting an end to creditor harassment.
If you fall behind in making your payments, a creditor can obtain permission to seize part of your paycheck by winning a judgment against you. The creditor could legally take up to 25% of your earnings. This could make it impossible for you to cover your rent, mortgage or other bills creating an even more significant hardship.

Your employer will be required by law to withhold a part of your paycheck and forward it to the creditor that won the judgment. This garnishment can last as long as the debt is owed.

Automatic Stay
Filing bankruptcy will immediately stop wage garnishments either temporarily or permanently. Bankruptcy’s automatic stay stops all legal actions regarding your finances including wage garnishments as soon as the court clerk stamps your filing. If you have money coming out of your paycheck, bankruptcy will put a hold on that until you work out a plan.

Once your bankruptcy is settled, the debt will be discharged, and you will no longer owe the money from the original garnishment.

Non-Chargeable Debt
Some debt cannot be discharged. Child support or alimony garnishments will not be eliminated or stopped and can continue during the bankruptcy process. Depending on how old your tax debt is, newer tax liabilities cannot be discharged in any bankruptcy filing, but if your tax debt is over three years old, there is a good chance it can be removed.

If you are struggling to pay your debt and your paycheck is not covering all your bills. If you have a wage garnishment or the threat of legal action that could result in losing some of your paycheck, contact a Columbus bankruptcy attorney to stop the garnishment and other legal action regarding your finances.

Individuals that are facing garnishment or are in the midst of one should seek out the advice of a bankruptcy attorney. This form of financial relief may be able to implement a stay which may put a stop to the garnishment during the process of the Ohio bankruptcy. It is most important that individuals don’t become intimidated by creditors.

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