Ending Wage Garnishment Through Bankruptcy

There aren’t many things worse than opening your paycheck and seeing that a creditor has already taken their cut. You didn’t get to decide how to spend that money. You didn’t even get to see it. The court ordered your employer to send it straight to someone you owe, and now you’re left scrambling to cover rent or groceries.

Our friends at Leinart Law Firm discuss how bankruptcy can put a stop to this. If wage garnishment is eating away at your paycheck, a chapter 7 bankruptcy lawyer can walk you through what happens next.

How Wage Garnishment Works

Creditors don’t just start taking money from your paycheck on their own. They have to sue you first. If they win that lawsuit and get a judgment, then they can ask the court for a garnishment order. Your employer gets that order and starts withholding part of your wages. Federal law says most creditors can’t take more than 25% of your disposable income. There’s another calculation too, based on how much you earn compared to the federal minimum wage. Whichever amount is less, that’s the limit, but child support, taxes, and student loans? Different rules entirely. Those can take even more.

The Automatic Stay Takes Effect Immediately

When you file Chapter 7 bankruptcy, something called an automatic stay kicks in right away. Same day you file. It’s a legal order that tells creditors to back off while the bankruptcy court works through your case. The stay stops:

• Wage garnishments

• Collection calls

• Lawsuits against you

• Bank levies

• Foreclosures

Once your employer gets notice of the bankruptcy filing, they have to stop sending your wages to creditors. Period.

What Happens To Already Garnished Wages

Money that’s already gone is usually gone for good. Bankruptcy stops future garnishments, but it doesn’t typically claw back what creditors have already taken. Sometimes you might recover wages garnished within 90 days of filing. It depends on your state’s exemption laws and the specifics of your case. Worth asking about, but don’t count on it.

Exceptions To The Automatic Stay

The automatic stay is powerful, but it’s not absolute. Some debts keep going no matter what:

• Child support and alimony

• Tax debts in most situations

• Criminal fines

• Student loans, with rare exceptions

If you owe these types of debts, filing bankruptcy won’t stop the garnishment. Chapter 7 rarely discharges them, so the stay just pauses things temporarily at best.

Permanent Relief Through Discharge

The automatic stay buys you time. The discharge is what actually solves the problem. When the bankruptcy court discharges your debts, those creditors lose their right to collect. They can’t restart garnishment because the debt itself is gone. This usually happens three to four months after you file. Credit cards, medical bills, personal loans, old utility bills? These typically get wiped out. Once they’re discharged, there’s nothing left for creditors to garnish your wages over.

When Garnishment Can Resume

If a creditor objects to your bankruptcy and wins, you might not get a discharge. Fraud is another way to lose your discharge. And if you mess up the paperwork by leaving creditors off your filing or violating the automatic stay yourself, you can run into problems. There’s also this: money you earn after filing bankruptcy is fair game for new garnishments on debts that weren’t discharged. So if you still owe child support or taxes, creditors can go after your post-filing income.

Understanding Your Timeline

Timing matters when money’s disappearing from every paycheck. The automatic stay starts the moment you file, but your employer won’t know to stop garnishing until they get official notice. Your attorney can make sure that notice goes out quickly. Most Chapter 7 cases wrap up in four to six months. The automatic stay protects you during that time from debts that can be discharged. After discharge, the protection becomes permanent for those debts.

Taking Action Against Wage Garnishment

You don’t have to watch creditors drain your paycheck indefinitely. Bankruptcy exists specifically to give people a way out of situations like this. Knowing your rights changes what’s possible. A bankruptcy attorney can tell you whether Chapter 7 makes sense for your situation and how fast you can expect relief. Sometimes people wait too long because they think there’s no solution, but there is.