If a creditor has garnished, or is about to garnish, wages, a bankruptcy case may stop the garnishment. The automatic stay, which is triggered by the filing of a bankruptcy petition, prohibits most creditors from continuing with collection efforts during a bankruptcy proceeding. A wage garnishment can reduce disposable income and cause emotional stress and financial hardship, even in the short-term.
With the exception of some debts like taxes, child support, and student loans, most creditors cannot garnish wages without first filing a lawsuit in civil court and obtaining a money judgment. Any bank or credit card company owed a balance due for charges on a credit card must file a lawsuit and prevail before garnishing wages.
Once a creditor receives a judgment, it can petition the court for an order to garnish wages. The garnishment order is served on an employer, who withholds a predetermined portion of wages every pay period and remits this amount to the creditor. The amount of wages that may be garnished from a paycheck is not unlimited. Debtors may also use exemptions to protect more of their wages from garnishment by creditors.
Filing bankruptcy triggers the protection of the automatic stay, which stops and prevents further collection activity by creditors. Thus, it is an effective tool to stop wage garnishment. Once a debtor files bankruptcy and notice of the case filing have been given to an employer, the garnishment must cease unless some clear exception applies.
An experienced bankruptcy attorney can take care of all the usual issues associated with a wage garnishment. An attorney can assume the responsibility of notifying the payroll department of the garnishee’s workplace. Any other payroll official related to the garnishment should also be given notice of the bankruptcy. A good bankruptcy attorney will ensure that all appropriate parties receive notice to stop the garnishment of wages.
If certain conditions are met, debtors may recover wages garnished prior to the filing of the bankruptcy case. These wages must have been garnished within the 90-day period prior to a bankruptcy filing and total $600 or greater.
An experienced bankruptcy counsel should be familiar with the typical problems associated with any type of garnishment. The Morrison Law Group is a team of seasoned bankruptcy attorneys who have helped 8,000 Utah residents file bankruptcy and gain a fresh start. Call the Morrison Law Group at 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.