Using Bankruptcy to Stop Wage Garnishment

One of the most immediate benefits of a bankruptcy petition is that the court orders an automatic stay, or hold, on all collection activities. That can allow the filer to catch their breath, analyze their situation, and get the legal help they need to begin to restore their financial status. However, that stay will not last forever, and it does not apply to all types of financial obligations.

Benefits of a “Stay”

A court-ordered stay on collection processes can stop most collection efforts and other negative financial consequences.

Foreclosures – although this protection is generally temporary.

Eviction – although if the eviction process has already begun, the stay may not stop it. In fact, if there are other circumstances, such as property damage or drug use, the landlord will often petition the court to lift the stay and the court will generally comply.

Utility disconnection – the stay will stop this action for 20 days or more, but the effects of a bankruptcy make it unlikely to be worthwhile for this benefit alone.

Wage garnishments – bankruptcy stays stop these actions completely and may even allow the filer to discharge the debts. Since employers are often concerned about wage garnishments, especially if there is more than one, this can be an important benefit of filing for bankruptcy.

Limits of a “Stay”

There are a number of financial issues that a bankruptcy “stay” will not prevent.

Some tax collection efforts – including audits, tax debts, or deficiency notices. However, a “stay” can prevent a property tax lien or property seizure.

Pension loan repayments – these wage withdrawals can continue even after a “stay.”

Child or alimony collection actions – including paternity suits or child support hearings can continue.

Criminal sentences – including those that may have been handed down in conjunction with fines. The fines may be held, but the sentence (such as that for community service) will continue.

Additional bankruptcy filings – if the court determines that a filer is using a second bankruptcy petition to confuse and prevent the negative elements of a previous filing, the current “stay” may be lifted.

Getting Legal Help with Preventing Wage Garnishments through Bankruptcy

Creditors can be relentless, and the deeper in debt a borrower is, and the further behind they fall, the more difficult it is to find a way out. Sometimes the most important element of a bankruptcy filing is the time out it provides through the automatic “stay,” especially from wage garnishments that make the work environment more difficult than ever. However, without a proper plan and wise advice from a skilled bankruptcy attorney in determining the type of bankruptcy to file, the temporary stay may not turn into a long-term solution.

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