Creditors frustrated by payment defaults and other debt collection challenges may file lawsuits against those people who owe them money. A successful creditor lawsuit can result in wage garnishment.
Creditors can intercept a portion of a debtor’s wages until they pay off what they owe. Those facing threats of wage garnishment or struggling to balance their budgets due to lost wages may need to consider filing for bankruptcy.
How can bankruptcy help?
Wage garnishment and other forms of debt collection typically stop during bankruptcy proceedings. The automatic stay provided at the time of filing can protect people from continued collection efforts until the courts grant their discharge or dismiss their pending case.
Debtors can initiate bankruptcy before the courts rule in favor of the creditor. This approach can limit the chances of secondary financial setbacks caused by lost income.
If a creditor has already secured a judgment and begun garnishing wages, bankruptcy can still help. Much of the time, the garnishment must stop at least temporarily during the bankruptcy case. If the courts discharge the debt associated with the garnishment, the filer may not need to worry about the continued garnishment of their wages after the bankruptcy case.
If they cannot discharge the debt, discharging major financial obligations could help. Eliminating some debts can help people keep their remaining debts in good standing.
Reviewing a pending lawsuit or garnishment order with a bankruptcy lawyer can be beneficial for those worried about their household budgets. A bankruptcy filing can prevent a garnishment, end a garnishment or help a person with garnished wages rebalance their budget to better address their financial obligations.
