When your debts start piling up and you’re struggling to pay the bills, the last thing you need is a creditor using wage garnishment to collect on your debts. Garnishment can take up to a quarter of your paycheck—which, if you’re already having financial trouble, can make the difference between surviving and falling even deeper into debt.
In some cases, bankruptcy is your best (or only) option. Filing for bankruptcy allows you to create a plan for a fresh financial start, and part of that includes stopping wage garnishments in The Woodlands, TX.
How bankruptcy stops wage garnishment
When a creditor has your wages garnished, they (except in the case of student loans, child support and taxes) must file a suit against you and get a court order authorizing wage garnishment. Your employer then withholds a set amount of your wages and sends them directly to the creditor until the debt is paid off.
Filing for bankruptcy will stop wage garnishment in most cases, with the exceptions of child support and other non-dischargeable debts. For all other debts, filing for bankruptcy grants you an automatic stay against your creditors. That means all calls must stop immediately, and your creditors are no longer able to garnish wages or take other actions against you—unless they can successfully petition the court to lift the stay and force you to continue paying.
During your bankruptcy case, you will meet with your attorney and the bankruptcy trustee to either liquidate your assets or create a payment plan (often at a great discount) to repay your creditors. This remedy takes the place of wage garnishment in The Woodlands, TX, and is designed to get you back on your feet while also repaying your creditors as much as possible. As long as you fulfill the terms of the agreement and the debt was included in your bankruptcy discharge, wage garnishment will end. However, if the debt was not included, the wage garnishment can continue after the discharge is granted and the stay is lifted.
What kind of bankruptcy should you file?
The type of bankruptcy you should file will depend on your income, your assets and how you want to pay off your debt. We’ve written at great length about the different types of bankruptcy; you should know that both Chapter 7 and Chapter 13 include an automatic stay that will end wage garnishment.
In short, Chapter 7 bankruptcy requires you to pass a “means test” to prove you cannot pay your debts, and requires you to sell off any assets you have to repay creditors. Chapter 13 allows you to keep your assets, but you’ll have to create a three- to five-year payment plan to repay your creditors. At the end of the period, assuming you have faithfully made all payments, your debts will be discharged.
If you’re looking to stop wage garnishment in The Woodlands, TX, call James R. Jones, Attorney at Law today. We can help you develop a strategy and stop your creditors from harassing you.