Wage garnishments are a hassle and an inconvenience, and can have long-lasting financial impact. Wages can be garnished after creditors win a judgment against a person; when the judgment is not paid, the creditor petitions the court for a garnishment order. When the order goes into effect, money is taken out of your paycheck and given to the creditor. If a wage garnishment is ruining your life, you should understand how a Chapter 7 bankruptcy filing affects wage garnishment rules.
Garnishment and Chapter 7
In most cases (except for those with past due child support), Chapter 7 Bankruptcy Relief puts a stop to wage garnishment. When bankruptcy is filed, the law protects you from creditors with an automatic stay, which orders your creditors to cease all collection attempts including garnishment. If you need a garnishment to stop immediately, consider an emergency Chapter 7 filing. It is more expensive, but the stay will go into effect more quickly.
Once you file, the bankruptcy should resolve your debts so the garnishment does not begin again. Chapter 7 bankruptcy requires the sale of some non-exempt assets. Money made from the sale is disbursed to creditors, after which debts are discharged. This scenario does not cover student loans, and it doesn’t apply to secured debts such as mortgages.
Is Chapter 7 the Best Option
Your bankruptcy options depend on your needs and your circumstances. The determining factor in whether you should file for Chapter 7 is your eligibility. Based on recent law changes, you are eligible if:
You have an income below the median in your state
You have no way to repay debts after your recurring expenses are paid, and you pass the ‘means test’
If these do not apply to your situation, you will have to file for another chapter (usually Chapter 13 for most consumers). If you are eligible for Chapter 7 Bankruptcy in Alexandria, VA, you’ll have to come to terms with losing your assets, or you’ll have to file a different bankruptcy type.
Bankruptcy Help
When you are in financial trouble, you should get help right away. A bankruptcy lawyer can look at your wage garnishment and help you decide on the most appropriate course of action. Your attorney can help you file the necessary paperwork, and to fulfill all legal requirements. For more information, visit the website.
