When you take a look at your paycheck and realize that you are being paid less than usual, the culprit could be wage garnishment. If you owe a debt, a creditor can go to court and ask to start taking money right out of your wages. This can be inconvenient to say the least, so what’s the best way of addressing this and putting a stop to wage garnishment once and for all in? A Montgomery County bankruptcy lawyer from our firm can tell you more about your options.
What Is Wage Garnishment and When Can It Happen?
When you owe a debt that you are behind on paying in Pennsylvania, the creditor may seek a court order allowing them to garnish your wages. This essentially removes money directly from your paycheck until the outstanding debt has been settled.
How Wage Garnishment Works?
When a creditor wants to garnish wages, they must obtain a court order allowing them to do so. Once the court issues this order, the creditor can then go to the debtor’s employer. The employer is then legally required to withhold a certain portion of the debtor’s paycheck, directing the employer to send those funds to the creditor.
Debts That Require a Court Order
The vast majority of lenders who want to garnish wages must seek a court order first. As such, the following debts require a lender to obtain an order before they can garnish wages:
- Credit card debts
- Medicals bills
- Personal loans
- Unpaid Rent
- Court fines and legal fees
Debts That Do NOT Require a Court Order
It’s important to understand that, in some instances, certain debts can be garnished without obtaining a court order. These include:
- Federal student loans
- Child support
- Alimony
- Tax debts
This practice is referred to as administrative wage garnishment, or AWG for short.
How Filing for Bankruptcy Can Stop Wage Garnishment
When you file for bankruptcy in Pennsylvania, an “automatic stay” is issued. This puts a stop to all collection activities. It comes into effect whether you file for Chapter 7 or Chapter 13 bankruptcy.
The Automatic Say Explained
The automatic stay is two-fold. The first purpose it serves is to allow the creditor relief from contact and collection efforts from creditors while they navigate the bankruptcy process. The second purpose is to ensure that all creditors are on equal footing. Without the automatic stay, some creditors may be able to recoup more funds than others. As such, the stay helps to preserve the goal of equal distributions for creditors.
Protection under the automatic stay will begin as soon as you declare bankruptcy and will end once your case is closed, whether through discharge or dismissal.
Wage Garnishments That Stop When You File
Under the automatic stay, you’ll find that the following debts may no longer be garnished once you file for bankruptcy:
- Credit card judgments
- Medical debts
- Certain bank levies
- Personal loan judgments
Wage Garnishments That Don’t Stop When You File
However, you should know that certain types of garnishments won’t be affected by this. If you owe child support arrears, alimony arrears, or student loans, they will not be affected by bankruptcy. Additionally, a creditor can try to get the court to lift the stay, as permitted under 11 U.S.C. § 362(d), so that they can continue collecting the debt, but it’s not guaranteed that their request will be granted.
Can Wage Garnishment Restart After Bankruptcy?
As mentioned, certain debts are not impacted by the automatic stay. As such, garnishment may resume following the closure of your case or during your case, if the creditor seeks to lift the stay.
When Garnishment Restarts During or After Your Case
Generally, a debt can continue being garnished after bankruptcy in the event that it is non-dischargeable. Additionally, post-petition debts, meaning any debt incurred after declaring bankruptcy, will not be protected by the stay.
As mentioned, some debts, like domestic support obligations and those owed to creditors who successfully petition the court to lift the automatic stay, will continue to be garnished while your case is ongoing.
Schedule a Consultation with Our Blue Bell Bankruptcy Firm
If you are considering filing for bankruptcy or taking other steps to deal with your debts in Montgomery County, obtaining legal representation for this process is critical. At Mudrick & Zucker, P.C., we understand that this process can be incredibly overwhelming. As such, it’s in your best interest to schedule a consultation and learn more about the bankruptcy process and how we can assist you during these difficult times.
