Wage garnishment is a debt collection tool that creditors use to take a portion of your paycheck to pay down the outstanding balance you may owe. This can be scary and anxiety-inducing because you may be extremely budgeted out, from month to month, and a creditor taking some of your wages could lead to you missing rent, missing a car payment, or skipping out on necessities. Luckily, there is a limit to how much creditors can garnish from your wages. Under federal law, the garnishment amount cannot be more than 25% of your net (take home) income, or the amount by which your take-home exceeds 30 times the federal minimum wage (currently set to $7.25/hour), whichever is less. Earnings include wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program. But how do we end wage garnishment?
Filing for Chapter 7 bankruptcy will stop wage garnishment in most cases via the Chapter 7 automatic stay. When you file for Chapter 7, the automatic stay immediately goes into place which protects you from creditors taking additional collection activity. There are a few exceptions to the automatic stay – such as child support collections – but largely, once a Chapter 7 is filed, you will have some breathing room from your creditors. A creditor can ask the bankruptcy court to lift the automatic stay, but only in limited circumstances.
You may be asking; how will your employer know to stop the wage garnishment? When you file for bankruptcy, you must provide the court with a list of your creditors. The court will then notify each creditor that you have filed for bankruptcy and the creditor is then required by federal law to suspend the wage garnishment. In some cases, your attorney may even be able to expedite the process of ending wage garnishment by sending a copy of your bankruptcy to the creditor. If you want the wage garnishment to end and to be able to have a fresh start free of your creditors’ harassment then the lawyers at Cantafio & Song PLLC can tailor the perfect plan for your future financial well-being.