If you’re being threatened with collection action – including wage garnishment – you may want to consider bankruptcy. Bankruptcy puts an automatic stay on your accounts so that creditors cannot continue with collection actions.
But what happens once your bankruptcy has been dismissed or discharged? Will the wage garnishment resume? The Cleveland bankruptcy attorneys at Luftman, Heck & Associates can help you navigate this complex situation. Call us today at (216) 586-6600.
The Automatic Stay
Wage garnishment can often be prevented by filing for bankruptcy. An automatic stay goes into effect, which prohibits creditors from continuing with collection actions. This means that your wages cannot be garnished during this time.
When you file for bankruptcy, it’s important to list the names and addresses of all creditors. This allows the court to notify the creditors that you have filed for bankruptcy. Once they receive notification, the wage garnishment and other collection actions must cease. Your employer will be able to end the wage garnishment so that the money is no longer taken from your paycheck.
The automatic stay is in place until the bankruptcy case has ended. Creditors can ask to have the automatic stay lifted earlier, but in the most cases, the court will not allow it. There must be a valid reason to lift the stay, and simply wanting to collect money is not one of them.
If this is not your first bankruptcy filing, the automatic stay will be very short – or even nonexistent. If you filed for bankruptcy in the past and the case ended within the past year, the automatic stay will last only 30 days. If you have filed for bankruptcy twice in the past year, there won’t be an automatic stay at all. The court does this to prevent people from constantly filing for bankruptcy in order to keep wage garnishments at bay indefinitely.
Wage Garnishment After Bankruptcy
Once the bankruptcy case has been dismissed or discharged, or if the automatic stay has been lifted, wage garnishment may resume. However, if the debt was discharged during bankruptcy, then your wages can no longer be garnished for that particular debt.
Most debts are discharged during bankruptcy, so it’s likely that your wage garnishments will cease. The only exceptions to this rule are domestic support obligations. Alimony and child support payments cannot be wiped out by bankruptcy. Therefore, if your wages are being garnished to pay for these obligations, then bankruptcy or an automatic stay will not end the garnishments.
Getting Legal Help for Wage Garnishment
Nobody wants their hard-earned money taken from their paycheck, but unfortunately, the law does allow it to happen in some cases. Bankruptcy can help wipe away many debts, but it is not a cure-all.
If you’re facing wage garnishment, you need to understand your legal rights. The Cleveland bankruptcy attorneys from Luftman, Heck & Associates can steer you in the right direction based on your financial situation.
We can help you keep more of your money in your pocket. To learn more about the wage garnishment laws that apply following a bankruptcy, contact us at (216) 586-6600.