Wage Garnishment in Chapter 7

Filing for Chapter 7 bankruptcy is your best course of action if your wages are being garnished, or you fear they will be in the future. By taking advantage of the automatic stay, your employer will have to cease withholding funds from your paycheck. Not only this, but all additional collection efforts will stop as well.

The automatic stay is only temporary. Wage garnishment and other collection efforts will continue once your case is closed unless the debt subject to withholding is discharged. Speak with an attorney to see if Chapter 7 bankruptcy is right for your financial situation.

Bankruptcy Attorney in Dallas County

Deciding to file for Chapter 7 bankruptcy is not an easy decision to make on your own. A qualified bankruptcy attorney can evaluate your financial situation and help you decide whether filing for Chapter 7 is the best course of action. Linda Littlefield is a well-respected bankruptcy attorney.  She will ensure the process goes as smooth as possible so you can achieve the financial freedom you deserve.

Call (972) 812-0900 to schedule a time to speak with Ms. Littlefield. Littlefield Law Firm represents clients in Dallas County, Collin County, Kaufman County and Rockwall County. 

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Does Chapter 7 Prevent Wage Garnishment?

Most creditors cannot garnish wages until after they’ve sued you and received a judgement from the court. This is usually a last-ditch effort to have you pay your outstanding debts, but it can have a devastating impact on your budget. You may be able to prevent your wages from being garnished by filing for Chapter 7 bankruptcy.

The law immediately protects you from creditors when you file for Chapter 7 by imposing an automatic stay. This automatic junction halts all activity by creditors while you go through the bankruptcy proceedings. Wage garnishment is a collection action so the garnishment will stop once you file for bankruptcy. The automatic stay will also halt collection calls, letters and personal confrontations from creditors. 

A notice will be sent to all creditors notifying them you have filed for bankruptcy. It typically takes around a day or two for them to receive the letter. A copy of the letter should also be delivered to your employer since they are responsible for ensuring your wages are garnished.

The automatic stay will end once your case is closed. But not to worry. A creditor cannot continue to garnish your wages if the debt subject to the withholding was discharged, meaning you are no longer liable for the debt. Garnishment will continue, however, if your case is dismissed or the debt subject to the withholding is not wiped out.

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When Does the Automatic Stay Not Apply?

Unfortunately, the automatic stay does not prevent garnishment and other collection efforts for all debts. A Chapter 7 automatic stay does not protect the following debts: 

  • Student loans
  • Overdue taxes
  • Family obligations such as child support and alimony

The automatic stay will not be in effect for too long if you had a bankruptcy case dismissed within a year of initiating the present case, per the Bankruptcy Abuse Prevention Act. The stay will only protect you for 30 days if this is the case. Garnishment will continue once 30 days have passed unless your attorney motions to extend the stay.

A creditor may not be too keen on you filing for bankruptcy and they might ask the judge to remove the automatic stay. However, the court will likely refuse the creditors request.

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Additional Resources

Federal Wage Garnishment Law – View a fact sheet provided by the United States Department of Labor over the nation’s wage garnishment laws. By accessing the document, you can find out how much of your check can legally be subject to garnishment, find out if an employer can fire you when wages are garnished and gain access to other federal laws.

Chapter 7 | United States Code – Read the section of the United States Code governing Chapter 7 bankruptcy. You can gain access to information such as why a case would be dismissed, find out why certain debts may not be discharged and see how certain liens are treated. The statute can be read on the Legal Information Institute website, an online legal resource provided by Cornell Law School.

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Bankruptcy Lawyer in Dallas

You should consult with an attorney if you are considering Chapter 7 bankruptcy. Linda Littlefield has nearly 25 years of experience in bankruptcy law.  She will lead you through the process and do whatever she can to stop creditors from garnishing your wages.

Call (972) 812-0900 to schedule a time to speak with Littlefield Law Firm. We are based in Dallas, TX, but we also help clients in areas such as Plano, Kaufman and Heath.

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