Wage garnishment can put a serious strain on your finances—especially when you’re already struggling with debt. If 15% or more of your paycheck is being taken by creditors, it can feel like there’s no way out. Fortunately, the U.S. Bankruptcy Code provides legal protections to stop wage garnishment immediately. In this article, we’ll explain how Chapter 7 and Chapter 13 bankruptcy can help you regain control of your income.
What Is Wage Garnishment?
Wage garnishment is a legal process that allows creditors to collect debts by taking money directly from your paycheck. Typically, creditors must first obtain a court judgment before they can begin garnishing your wages. Once approved, your employer is required by law to withhold a percentage of your gross income—often up to 15%—and send it to the creditor.
Two Ways to Stop Wage Garnishment Legally
- File Chapter 7 Bankruptcy – The “Fresh Start” Option
Chapter 7 bankruptcy is commonly known as the “fresh start” bankruptcy because it allows most unsecured debts—like credit card bills, medical bills, and personal loans—to be wiped out completely.
When you file for Chapter 7, an automatic stay goes into effect immediately. This legal order stops all collection activities, including:
- Wage garnishments
- Lawsuits
- Creditor phone calls
- Bank levies
Once your employer receives notice of the automatic stay, they must stop garnishing your wages immediately. This gives you instant financial relief and allows you to keep your full paycheck.
- File Chapter 13 Bankruptcy – The Repayment Plan
If you don’t qualify for Chapter 7 or want to protect certain assets, Chapter 13 bankruptcy might be a better fit. Chapter 13 sets up a court-approved repayment plan that allows you to pay back your debts over three to five years—often at a reduced amount.
Just like Chapter 7, filing Chapter 13 triggers an automatic stay, which immediately stops wage garnishments. You’ll repay what you can afford based on your income, and in many cases, remaining debts can be discharged at the end of the plan.
How Quickly Does Bankruptcy Stop Garnishment?
The automatic stay goes into effect the moment your bankruptcy case is filed. Most wage garnishments will stop within a few days, and some employers stop the garnishment as soon as they’re notified. In urgent cases, your bankruptcy attorney can file emergency paperwork to get the garnishment halted as quickly as possible.
Which Option Is Right for You?
Choosing between Chapter 7 and Chapter 13 depends on several factors, including:
- Your income level
- The types of debt you have
- Whether you’re trying to keep certain assets (like a home or car)
- Your financial goals moving forward
An experienced bankruptcy attorney can review your situation and recommend the best path for stopping wage garnishment and getting your finances back on track.
Final Thoughts
Wage garnishment doesn’t have to be permanent. Filing bankruptcy under Chapter 7 or Chapter 13 can stop wage garnishment and give you the breathing room you need to recover financially. If you’re tired of losing part of your paycheck to creditors, it may be time to explore your legal options.
Need Help?
Talk to a qualified bankruptcy attorney today to find out how you can stop wage garnishment and start fresh.
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