Facing wage garnishment can be a distressing and overwhelming experience. Individuals who have been given a wage garnishment order may feel helpless as they watch a portion of their hard-earned paycheck being siphoned off to pay debts. At Macco & Corey P.C., we specialize in bankruptcy law and provide expert legal services to individuals struggling with wage garnishments. Our firm is renowned for its deep understanding of bankruptcy court and laws, and its ability to help find relief from wage garnishments.
Understanding Wage Garnishment and Its Consequences
Wage garnishment is a legal procedure in which a portion of an individual’s earnings is withheld by their employer to repay creditors. This process is typically initiated after a creditor obtains a court order to garnish wages, known as a garnishment order, allowing them to collect the owed money directly from the debtor’s wages.
Wage garnishments can have severe financial implications, reducing disposable earnings and making it difficult for individuals to cover basic living costs. This can lead to a cycle of financial insecurity and debt that is hard to break free from without legal intervention.
Types of Bankruptcy and Their Implications for Wage Garnishments
It is important to understand the different types of bankruptcy that are available when considering filing for bankruptcy to stop wage garnishment. The two primary forms of bankruptcy that individuals typically file are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 11 is typically used for large businesses.
Chapter 7 Bankruptcy is also known as liquidation bankruptcy and involves the sale of the debtor’s non-exempt assets to repay creditors. Most unsecured debts such as credit card debt and medical bills are discharged, providing the debtor with a fresh financial start. Filing for Chapter 7 Bankruptcy can immediately stop wage garnishments due to the automatic stay provision, which temporarily halts most collection activities as soon as the Chapter 7 Bankruptcy petition is filed.
Chapter 13 Bankruptcy is often referred to as reorganization bankruptcy and allows individuals to keep their property while repaying their debts over a three-to-five-year period based on a court-approved repayment plan. Similar to Chapter 7, Chapter 13 also triggers the automatic stay, which will stop wage garnishment and other collection actions. Chapter 13 can offer a more structured and manageable approach to repaying most debts, which may include catching up on missed car payments and mortgage payments, and avoiding foreclosure actions.
Chapter 11 Bankruptcy is primarily designed for businesses but can be utilized by individuals with substantial debts and assets. Known as reorganization bankruptcy, Chapter 11 allows businesses to continue operating while restructuring their debts according to a court-approved plan. This process can halt wage garnishment and other collection activities. A Chapter 11 bankruptcy case is much more complex and expensive than Chapter 7 or Chapter 13 but it offers significant benefits for businesses with large-scale financial issues.
How Filing Bankruptcy Can Stop Wage Garnishment
The moment an individual commits to a bankruptcy filing, an automatic stay goes into effect. This is a powerful legal tool that halts most collection activities, including wage garnishment, foreclosures, and repossessions. The automatic stay provides immediate relief by stopping creditors from continuing their collection efforts, giving the debtor breathing room to reorganize their finances.
While the automatic stay offers temporary relief from the act of wage garnishment, the outcome depends on the type of bankruptcy filed for the specific bankruptcy case. In Chapter 7, once the bankruptcy process is complete and debts are discharged, garnishments related to those discharged debts are permanently stopped. In Chapter 13, garnishments are halted while the debtor adheres to the repayment plan, and upon successful completion of the plan, remaining eligible debts are discharged, effectively ending any related garnishments.
When Bankruptcy Filing May Not Stop Wage Garnishment
Despite the broad protections offered by the automatic stay, there are certain exceptions where filing for bankruptcy may not stop garnished wages.
Domestic support obligations such as child support or alimony are typically not halted by the automatic stay. Child support obligations are prioritized and must be continued as these are legally required deductions.
Tax debts and other tax-related garnishments may persist despite a bankruptcy filing, although the specifics can vary based on the nature of the tax debt and the bankruptcy chapter filed.
While filing for bankruptcy can temporarily halt garnishments for student loans, discharging these debts is notably challenging and typically requires a separate legal process to prove undue hardships.
Understanding these exceptions is crucial, and because of the nuances when it comes to student loans, child support, and taxes, it is important to have an experienced bankruptcy lawyer like the ones at Macco & Corey P.C., on your side.
How Macco & Corey P.C. Approaches Wage Garnishment Cases
At Macco & Corey P.C., we adopt a client-centric approach, tailoring our legal strategies to the unique circumstances of each bankruptcy case. If you need to file for bankruptcy, it is crucial to have a legal team with the knowledge and understanding of the complexities of bankruptcy law.
We begin with a thorough consultation to understand your financial situation, the nature of your debts, and the specifics of any wage garnishment you may be dealing with. This allows us to provide informed advice regarding the best course of action.
If filing for bankruptcy is determined to be the best course of action, we will guide you through the filing process, ensuring all the necessary paperwork is accurately completed and submitted promptly.
Once your bankruptcy petition is filed, we will take immediate steps to enforce the automatic stay, notifying creditors and your employer to halt certain wage garnishments.
Throughout your bankruptcy case, we will provide extensive legal representation, advocating for your rights in bankruptcy court and working to achieve the best possible outcome for your case.
Other Areas of Expertise at Macco & Corey P.C.
Beyond wage garnishment relief, we offer a broad range of services in the field of bankruptcy law. Our firm excels in debt negotiation and settlement, helping clients negotiate with most creditors to settle debts for less than the full amount owed. We also specialize in foreclosure defense, offering legal strategies to assist homeowners in avoiding foreclosure and retaining their properties. We also provide credit counseling to guide clients in managing their finances, reducing credit card balances, and rebuilding their credit report score post-bankruptcy. Credit counseling can be beneficial for individuals who are trying to get out of debt and trying to avoid wage garnishment.
For businesses, we offer expert assistance in navigating Chapter 11 bankruptcy to reorganize and remain operational. Our diverse expertise ensures that we can support clients through various financial challenges and help them with money judgment to achieve a stable financial future.
Wage garnishment can create significant financial strain, but bankruptcy offers a powerful legal remedy to halt these garnishments and provide individuals with a path to financial stability. At Macco & Corey P.C., our experienced attorneys are dedicated to helping clients navigate the complexities of bankruptcy law and receive relief from garnishments. If you are facing garnishments or thinking your only option is to file for bankruptcy, we invite you to contact our office for a consultation.
Let us offer our legal assistance with bankruptcy, and help you take the first steps toward regaining control of your financial future.