Stopping Wage Garnishment
Dealing with wage garnishment can be distressing, particularly if you are trying to pay off other debts for a car, credit cards, medical bills, or a mortgage. An experienced Los Angeles bankruptcy attorney may be able to help you stop wage garnishment and get your finances back on track.What is Wage Garnishment?
Wage garnishment means that the court has issued an order requiring your employer to withhold a percentage of your paycheck and send it directly to someone to whom you owe money until your debt is paid. Usually your creditors have to sue you, win, and get a court order in order to garnish your wages. However, your wages can be garnished without a court judgment in the context of unpaid income taxes, court-ordered child support, back payments of child support, and student loans on which you’ve defaulted.
Federal law, which is controlling in California, limits how much creditors with an order may take from your paycheck. They can only garnish the lesser of the following two options: (1) 25% or less of your disposable earnings or (2) the amount by which your wages exceed 30 times the minimum wage. In the case of wage garnishment, your disposable earnings are what remain after mandatory tax deductions.
If more than one creditor is able to garnish your wages, only 25% or less of disposable earnings may be garnished in total, except in the case of child support or alimony. So if your wages are garnished to cover debt from three different credit cards, the percentage that each credit card receives from the garnished wages must together add up to 25% or less.
Wage garnishment is strictly limited, and for families and individuals who are barely able to stay afloat on their income, wage garnishment can be devastating. In those cases, it may make sense to file for Chapter 7 or Chapter 13 bankruptcy to stop the garnishment.What Happens to Wage Garnishment After You File for Bankruptcy?
When you file for either Chapter 7 or Chapter 13 bankruptcy, most but not all wage garnishments are halted as part of an automatic “stay,” or stoppage, of creditors’ attempts to collect certain debts. Part of filing for bankruptcy requires that you list all your creditors. They will be notified of the bankruptcy.
You can make sure that the garnishment stops immediately by notifying both your employer and the officer levying the garnishment of your bankruptcy. Or you can directly email the creditor the notice of bankruptcy. However, you should be aware that certain garnishments will remain in effect. For example, domestic support obligations continue regardless of bankruptcy, so any garnishment for child support or alimony will continue. Creditors are able to request that the court lift the stay, but must show a good reason.
An automatic stay ends: (1) after you receive a bankruptcy discharge, or (2) if your case is dismissed without a discharge, or (3) if the court lifts it. If you receive a discharge, any underlying obligations for wage garnishment such as credit card debt, medical bill debt, or other unsecured debt that was included in the discharge, are wiped out. The wage garnishment for those debts is eliminated.
If your wages were garnished within a 90-day period prior to filing for bankruptcy, they total over $600.00, and you have enough exemptions to cover them, you may be able to recover them. You must request the return of the garnished wages in a complaint filed with your bankruptcy paperwork.
An experienced Los Angeles bankruptcy lawyer can help you determine whether filing for Chapter 7 or Chapter 13 bankruptcy will stop your wages from being garnished. Contact Devin Sawdayi at 310-475-9399 or via his online form for help with this process.