Can Bankruptcy Stop Wage Garnishment? 

Wage garnishment is perhaps the most intrusive collection action taken by a creditor or debt collector agency. Wage garnishment is unexpected and unanticipated by design and nature. The wage garnishment will be effective on your next paycheck. You will not be notified in advance. Notification is sent once the garnishment order has reached your employer. This unexpected element can prove to be very costly, especially for someone who depends on their next paycheck to pay current expenses like rent or mortgage.

What Is Wage Garnishment?

Wage garnishment is deducted from your earnings for the benefit of creditors up to 25% of your gross, Before deductions for taxes and retirement contributions.

Your employer must advance the funds to the person holding the garnishment order. The deduction will continue until all outstanding amounts (including interest and costs) are paid in full.

What Is The Best Way To Get Your Wages Garnished By A Creditor?

Wage Garnishment may be issued by any creditor, other than the IRS and child support enforcement agencies. A judgment against you is required in order to obtain a garnishment order. To obtain a judgment, the creditor must sue you in Court. A process server will serve you with a Summons and Complaint.

It is important that you understand that a collection agency or credit card company cannot garnish your wages until they have obtained a judgment against you.

You have 20 days to respond or answer any Court papers served on you. It is best to take action and not ignore court papers because of the consequences.

You can be proactive by filing for bankruptcy relief. Bankruptcy will stop creditors from pursuing collection efforts such as a lawsuit or wage garnishment. After filing bankruptcy, the garnishment will cease immediately.

Call us today to schedule a consultation and find out if filing bankruptcy is the right option. One of our attorneys will review your case and help you make the right decision. Our focus is on consumer bankruptcy. We want to help you get financial stability.

What Are Your Options?

  • Bankruptcy – The filing of a Bankruptcy immediately stops garnishment orders and prevents any future deductions from your earnings.
  • Claim for exemption If you are the “head of the household” standard in Florida, garnishment of wages may not be applied to you. Head of household means that you provide at least half the financial support for a minor or dependent. You will need to file a Claim for Exemption and request a hearing to request exemption from garnishment orders. If you are able to meet the standards, the garnishment percentage may be reduced or canceled altogether. Please be aware that the following applies:
    • A Florida judgment is valid for ten years and can be renewed for another ten years. Even if you have been deemed head of household, garnishment is still possible. The creditor could attempt to garnish your wages in the future and succeed.
    • As it earns interest each year, a judgment will grow. This means that a judgment creditor could be left inactive for many years, while the debt grows based upon interest.
    • Although you may be exempted from wage garnishment, it does not mean the creditor can’t engage in other collection efforts. A judgment creditor may have many tools available to satisfy a judgment. A judgment creditor can also seize vehicles, boats, or other valuables from bank accounts.
  • Settlement You may be able to negotiate a lump-sum settlement or a payment agreement with the garnishing creditor. The creditor might agree to stop garnishing your wages and to allow you to make payments as part of the agreement.
    • Lump-sum settlements: While the idea of settling for a portion of the debt may sound appealing, take a closer look at the numbers.
      • The outstanding balance could be increased by interest, late fees, and costs. When it comes to consumer credit, the average interest rate after default ranges from 29% to 30 percent. The debt will increase exponentially, easily doubling or tripling in size.
        • Are you really willing to settle for 40% of the remaining debt? It is most likely not true.
        • You may be able to pay only a fraction of all of your total debt in Chapter 7 bankruptcy.
        • You would be required to repay a portion of your debts in a Chapter 13 bankruptcy. This percentage could range from 3 to 5 years. This percentage is based on your monthly income.
      • Forgiveness of Indebtedness could be considered income for tax purposes. When weighing the benefits of settlements, consider the tax implications. The amount of debt forgiven may need to be declared as income on your federal income tax return. You may be subject to additional taxes depending on your tax bracket or circumstances.
        • The bankruptcy filing does not automatically trigger the release of any indebtedness issues. You will not be required to pay federal income tax on any debt you have gotten rid of in bankruptcy.
      • Credit reporting and settlement: If you reach a settlement, your creditor can report on your credit reports that the debt was paid in settlement. This will affect your credit score and negatively impact your ability to get credit.

Contact Our Office

Bruner Wright is the best bankruptcy attorney in Southern Georgia. Our team has more than 30 years of experience in helping people file chapter 7 bankruptcy, chapter 11 bankruptcy, chapter 12 bankruptcy, and chapter 13 bankruptcy. Our team has built a very successful practice helping people properly discharge their debts. We provide a personal service that is thorough and detailed in every aspect of our industry. We strive to be responsive to our clients’ needs. 

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contact us today to schedule a consultation and find out if Bankruptcy is the right option. One of our attorneys will review your case and help you make the right decision. Our focus is on consumer bankruptcy. We want to help you get financial stability.