Filing Bankruptcy Can Halt Wage Garnishments

You may be able to stop a creditor from garnishing your wages, and even get some of the garnished wages back, by filing for bankruptcy. Find out how bankruptcy can halt wage garnishments.

When a person files bankruptcy, an automatic stay is put in place. This prohibits most creditors from collecting money. That means wage garnishments are also prohibited as long as the automatic stay is in place. A creditor has to ask the court to lift the stay, which will only be granted that if there’s valid reason. The automatic stay does not apply to domestic support court orders, such as child support or alimony, as they’re regarded as priority debts that can’t be discharged by bankruptcy. Therefore, if your wages are being garnished because of domestic support, the garnishment will not stop when you file.
An automatic stay ends in one of three ways: (1) you receive a discharge, (2) the case is dismissed with no discharge, or (3) the court lifts the stay. If you receive a discharge that includes the obligation for wage garnishment, creditors are not allowed to resume garnishment after bankruptcy. However, if you case was dismissed without a discharge, garnishment by creditors can continue.
Under some circumstances, you may be able to get back some of your wage garnishments, even if they were taken before you filed for bankruptcy. If your wages were garnished in the 90 days prior to filing, they were over $600 in aggregate, and you have adequate exemptions to cover them, you can usually get them returned to you by filing a complaint in your bankruptcy.
To make sure garnishments stop as soon as you file for bankruptcy, notify your company’s payroll department of your filing. As most wage garnishments are handled by the local sheriff’s office, notify the sheriff or applicable office of your filing so he or she can immediately stop garnishments.
For more information on wage garnishments or for a trustworthy bankruptcy attorney in Las Vegas, contact DeLuca and Associates today.