Wage Garnishment in Chapter 13

Wage garnishment is the last resort for creditors to have you pay back debts. For most debts, a creditor will have to take you to court before they can withhold money from your paycheck. That being said, some debts are automatically garnished if you fall behind on payments. 

Filing for Chapter 13 may protect you from wage garnishment. This protection is only temporary, but it allows you to get caught up on your financial obligations. Contact a bankruptcy lawyer to find out how Chapter 13 bankruptcy can protect you from wage garnishment.  

Bankruptcy Attorney in Dallas County

Wage garnishment will have a detrimental impact on your finances. You are already in a financial bind, and now creditors want to withhold your wages. Littlefield Law Firm is 100% devoted to bankruptcy law. Linda Littlefield will help you through the bankruptcy process and do everything in her power to ensure your wages are protected. 

Call (972) 812-0900 to take advantage of our free consultation. We are based in Dallas County, but also assist clients in Collin County, Kaufman County and Rockwall County.  


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How Does Wage Garnishment Work?

Wage garnishment is a court order that requires an employer to withhold a certain amount of an employee’s earnings. This money is then sent to a creditor to pay off debts. A debtor’s wages will be automatically garnished for certain debts such as backed child support and alimony, student loan debt and unpaid taxes, criminal fines and penalties.  

Unless you owe child support/alimony, back taxes or defaulted on a student loan, a creditor will have to bring you to court and seek a court order requiring you to pay your debts. This is typically a last-ditch effort by creditors.

Creditors are limited to how much someone’s wages can be garnished. For example, Texas law allows for up to 50% garnishment for domestic support obligations such as alimony and child support. Defaulted student loans, on the other hand, are garnished by 15%. Keep in mind; the amount withheld for a defaulted student loan cannot exceed 30 times the minimum wage.  


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Does Chapter 13 Bankruptcy Stop Wage Garnishment?

Wage garnishment will have a dramatic impact on your finances. Thankfully, filing for Chapter 13 bankruptcy will prevent your wages from being garnished. The automatic stay will take effect once a debtor files for bankruptcy. This legal injunction halts all actions by creditors, such as wage garnishment. 

Once the injunction takes effect, a notice will be sent to all creditors notifying them you have filed for bankruptcy. It will typically take one or two business days for creditors to receive the notice. Any wages withheld after the automatic stay goes into effect violate federal law, and the debt collector could be held in contempt.

You will only be protected by the automatic stay for the duration of your bankruptcy case, which is between three and five years for Chapter 13. A creditor cannot garnish your wages if the debt subject to the withholding was discharged. However, garnishment will continue if the debt was not discharged at the end of your bankruptcy repayment plan.


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Garnishments Not Protected by the Automatic Stay

Of course, the automatic stay comes with a catch. Not all debts are protected by the injunction. This means debt collectors can continue to garnish your wages if the debt is not protected by the automatic stay. A chapter 13 automatic stay does not protect the following obligations:

  • Overdue taxes
  • Student loans
  • Alimony
  • Child support

The automatic stay will not take immediate effect in every bankruptcy case. If this is your second or subsequent bankruptcy case, your attorney may have to file a motion to initiate the injunction. Even then, the stay may only be in effect for 30 days unless your attorney files an additional motion to extend the stay. 


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Additional Resources

Chapter 13 | Bankruptcy Code – Follow the link provided to read the chapter of the Bankruptcy Code governing Chapter 13 bankruptcy. You can learn about your rights and powers as a debtor, the role of a trustee and learn about the Chapter 13 payment plan. The information can be read on the Legal Information Institute, an online legal resource provided by Cornell Law School.

Federal Wage Garnishment Laws – View a PDF from the U.S. Department of Labor discussing the nation’s wage garnishment laws. You can learn more about how much can be legally withheld from your check, find out if an employer can terminate you because of the garnishment and gain access to other federal garnishment laws.


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Bankruptcy Lawyer in Dallas

Are your wages being garnished? Is a creditor still garnishing your wages after the automatic stay has taken effect? Linda Littlefield has been assisting consumers and small businesses with bankruptcy and related issues for nearly 25 years. She will thoroughly evaluate your financial situation and help you decide if Chapter 13 is right for your situation.

We understand you are already in a financial bind, which is why we strive to provide quality legal representation at an affordable cost. Call (972) 812-0900 to schedule a free case evaluation. Littlefield Law Firm assists clients in areas such as Dallas, Plano, Kaufman and Heath.


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