If you are already in debt and having trouble paying your bills, the threat of wage garnishment can only make matters worse. Having your wages garnished by creditors can cause additional financial stress and leave many people with more serious problems. Luckily, there are ways to manage wage garnishment. Filing for bankruptcy is one way to stop a wage garnishment and even get some of your wages back.
How It Works
When you file for bankruptcy, the court issues an automatic stay order. This order halts all credit collection efforts, including wage garnishments. Once issued creditors cannot attempt to collect on the debts and must halt all legal proceedings for collections. The automatic stay order can provide peace of mind and room to breathe while you develop a plan to resolve your debts.
The bankruptcy process also has the ability to recover some of the wages lost to garnishment. A “preference” is a law that allows for the bankruptcy court to recover any wages that have been garnished within 90 days of the filing. Older garnishments are less likely to be recovered. However, the creditor must return any wages garnished that equaled more than the amount the creditor would have received in a Chapter 7 case.