How Can I Stop or Prevent Wage Garnishments?

The laws regarding wage garnishments vary by state. Most states allow wage garnishments for child support and alimony as well as state income taxes. The federal government can garnish your wages for taxes and other debts owed to the government. In some states, a creditor can file a debt collection lawsuit to obtain a judgment and then garnish your wages to collect the judgment. It is important to understand the laws related to wage garnishments and how to stop wage garnishments.

Bankruptcy lawyers analyze your situation to determine if your wages may be subject to garnishment. In many cases, filing a Chapter 7 or Chapter 13 bankruptcy case stops wage garnishment.

Schedule a free consultation with a bankruptcy lawyer to discuss how you can stop wage garnishments.

How Much Can a Creditor Take From My Paycheck?

The Consumer Credit Protection Act (CCPA) restricts the amount of money a creditor may garnish during each pay period.  States may enact laws that provide additional limitations on wage garnishments. The federal limitations apply to several types of wage garnishments. The type of debt can impact the amount that may be garnished. For instance, the limit for wage garnishments for judgment debts is the amount a person’s earnings exceed 30 times the federal minimum wage or 25 percent of a person’s disposable earnings, whichever is lesser.

However, the maximum amount for wage garnishments for child support and alimony is up to 50 percent of a person’s disposable wages. If the person does not support another spouse or child, the garnishment can be as high as 60 percent of disposable income. In addition, another five percent may be garnished if the person has alimony or child support payments that are over 12 weeks past due.

As you can see, a wage garnishment can take a substantial portion of your disposable income, making it impossible to pay your other debts. However, there may be a way to stop wage garnishments and deal with the debt. Filing a Chapter 7 or Chapter 13 bankruptcy case could solve both of your problems.

Wage Garnishments for Certain Types of Debt

While the laws in many states vary regarding whether or not a creditor can garnish your wages, the Bankruptcy Code applies to all debtors in bankruptcy. Therefore, if you file a Chapter 7 or a Chapter 13 case, the creditor must cease garnishing your wages pursuant to the automatic bankruptcy stay. Whether or not the creditor may receive permission from the court to resume collection efforts depend on the type of debt and the chapter of bankruptcy being filed.

Below are several types of common debts that creditors may attempt to collect through a wage garnishment and how bankruptcy resolves that debt.

  • Personal Judgments

If a creditor has an unsecured debt, such as a medical debt or credit card debt, the creditor must obtain a personal judgment before it can apply to garnish your wages. The creditor must file a debt collection lawsuit, obtain a judgment against you, and request a wage garnishment order from the court (if your state allows wage garnishment for this type of debt).
In a Chapter 7 or Chapter 13 case, the judgment debt can be discharged eliminating the threat of a wage garnishment by this creditor.

  • Student Loans

A student loan company or a company collecting on behalf of the student loan company may garnish your wages. The creditor could receive up to 15 percent of your disposable income through a wage garnishment if you default on your student loans. The company is not required to file a lawsuit to garnish wages, but it must provide you notice of the wage garnishment.
Most student loans are not eligible for a discharge. Therefore, filing a Chapter 7 bankruptcy case will not stop the wage garnishment for very long. However, when you file a Chapter 13 bankruptcy case, the company cannot garnish your wages during the bankruptcy case. During that time, you might be able to work out a repayment plan with the student loan company that does not involve wage garnishments.

  • Domestic Support Obligations

Your wages may also be garnished for past due alimony and child support payments. This wage garnishment can cause a substantial financial burden if you are also paying your current support payments. Alimony and child support payments are not dischargeable in bankruptcy. However, you can pay back child support and alimony payments through a Chapter 13 plan to avoid wage garnishments and jail time. You must remain current on future support payments as part of the requirements of your Chapter 13 plan.

  • Income Taxes

Wage garnishments for federal or state income taxes can be substantial and cause a serious financial hardship for your family. Again, most tax debts are not eligible for a discharge, but you can stop the wage garnishment by filing a Chapter 13 case and paying the debt through your repayment plan.

Some old income tax debt may be discharged in a Chapter 7 case. Therefore, contact a bankruptcy attorney now before the government begins garnishing your wages. If your taxes meet the requirements for a discharge, you may be able to avoid wage garnishments and get rid of your old income tax debt by filing a Chapter 7 or Chapter 13 bankruptcy case.

Preventing Wage Garnishments By Filing Bankruptcy

Even though you can stop wage garnishments by filing a bankruptcy case, it is better to prevent the wage garnishments from beginning. Once your wages are garnished, you will probably not be able to recover any of the money garnished from your wages. Instead of losing huge amounts of your income through wage garnishments, contact a bankruptcy attorney to discuss filing a Chapter 7 or Chapter 13 bankruptcy case.

During your free consultation with a bankruptcy attorney, you learn how filing for bankruptcy relief gets rid of debt while protecting your property and income from creditors and the court.

It may be difficult to face a debt problem when you are struggling to make ends meet.  However, with the help of the bankruptcy court, you can get a fresh start to begin rebuilding your financial well-being after a financial crisis.