Will Filing Bankruptcy Stop Wage Garnishment?
Garnishment is a collection remedy used by creditors.
State law governs to what extent wages, for example, may be garnished.
In California, a creditor with a valid judgment can garnish up to 25% of a debtor’s net wages (after-tax income).
Yes, Filing Bankruptcy Will Stop Garnishments
When you file a bankruptcy case, a temporary “stay” goes into effect stopping all collections efforts by creditors, including garnishment while the bankruptcy case is pending.
If you complete your bankruptcy case and receive a discharge of debts, then the stay becomes permanent.
The path to discharge is different depending on which Chapter of bankruptcy you file.
And which chapter you file depends on your income, expenses, assets and debts.
Chapter 7 Process To Discharge
For a Chapter 7 case (the most common for individuals), the path to discharge is the shortest
In Chapter 7 you file your case, and then creditors have a short period of time (approximately 90 days) to file an objection to the discharge of your debts.
Objections would be for things such as the debt being incurred through fraud, or theft, or things like that. [pullquote]See more about which debts can be discharged[/pullquote]
If no objections are filed and you comply with all the other administrative requirements, you will get your discharge shortly thereafter.
Chapter 13 Process To Discharge
In Chapter 13, you propose a repayment plan (which can repay anywhere from 0-100% of your debts, depending on the types of debts, value of your assets, and your budget). Once the plan is approved, you will make payments for 36-60 months.
If you complete your payments and all other requirements, your discharge will be granted a few months after completion of the payments.
Once you get your discharge, your creditors can no longer garnish your wages or take any action to collect on their judgment debt. Forever.
And that is nice.
Hire An Experienced Bankruptcy Attorney
The summary above may seem like there is nothing to getting a discharge.
That is not true.
Bankruptcy is very complicated with lots of traps for the unwary.
When handled by a professional, the process will seem very smooth and you will obtain the results you seek.