Facing large amounts of financial debt can be extremely stressful. Even if you’re earning money, you may be subjected to wage garnishments, which can add to the pressure of an already overwhelming attempt to manage your funds. 

While there are many options for managing debt and seeking debt relief, bankruptcy could be the most appropriate option for you. Here’s what you should know about how filing for bankruptcy will impact any wage garnishment orders you’re currently facing, as well as other considerations of filing—

What Are Wage Garnishments?

As defined by the U.S. Department of Labor, wage garnishment is the lawful procedure of an employer withholding a person’s earnings from their paycheck for the payment of a debt. Examples of debts for which wage garnishment may be pursued include:

• Child support
• Spousal support
• Student loans
• Medical bills
• Unpaid taxes
• Credit card debt

In order for an employer to withhold wages, they must first receive a writ of garnishment, which is a court order. The employer is then responsible for calculating, withholding, and submitting the requested amount of garnished wages to the appropriate agency. 

The Impact of Filing for Bankruptcy on Wage Garnishments

If you are currently subject to a wage garnishment order and part of your paycheck is currently being withheld to pay a debt, filing for bankruptcy may be one option for ending the garnishment. 

When you file for bankruptcy, an automatic injunction known as the automatic stay goes into effect. The automatic stay prevents creditors from continuing debt collection efforts against you while your bankruptcy case is in process, which includes garnishment and orders for new garnishment. The automatic stay is triggered the moment that you file for bankruptcy. 

When Can Wage Garnishments Resume?

One important thing to know about the automatic stay is that while it does put a halt on most wage garnishment orders throughout the course of your bankruptcy case, it does not apply to all types of debt, and it is not a permanent solution to managing debt or wage garnishment; the automatic stay is temporary. 

Only wage garnishment orders for dischargeable debts will be paused during the automatic stay; wage garnishment orders for nondischargeable debts will continue. Nondischargeable debts include student loans, tax debts, child support, alimony, and credit card debt that was accrued to pay taxes. 

Once the automatic stay lifts, wage garnishment may resume depending on the outcome of your bankruptcy case. If your bankruptcy action was successful, then certain debts may be discharged (note, however, that the nondischargeable debts mentioned above will not be settled by bankruptcy) or you may enter a repayment plan with your creditors. If your bankruptcy case is not successful, however, you may be in the same position that you were prior to filing. 

Should I File for Bankruptcy to Stop Garnishments?

Before you decide to file for bankruptcy, it’s strongly recommended that you seek counsel from a certified financial professional, a bankruptcy attorney, or both. Filing for bankruptcy can provide you with a clean financial slate, but it is a big decision that can also have a negative impact on your credit score and your ability to secure loans or lines of credit in the future. With that in mind, bankruptcy might be a good option if you have exhausted other debt-relief alternatives, such as consolidating debt, settling debt, or refinancing. 

It’s also important to know that filing for bankruptcy may not be the only way to stop garnishments. In addition to the automatic stay that goes into effect the moment you file for bankruptcy, other options for ending wage garnishment include protesting the wage garnishment by filing papers with the court that makes a strong case that you qualify for an exemption or need a larger amount of your paycheck to pay your debts. Another option is paying the debt for which you’re being subjected to wage garnishment in full. Rearranging your finances may allow you to do this. 

Get Help with Your Wage Garnishment and Bankruptcy Case

Understanding the laws regarding wage garnishment and bankruptcy can be very confusing and if you’re facing large amounts of debt, you may be overwhelmed and unsure of how to proceed. It’s important to know that professional help is available. If wage garnishment is something that you are dealing with and you are wondering if filing for bankruptcy is the best next step for you, your next move should be to set up a consultation with an expert who can provide you with more information about how bankruptcy may impact your overall financial picture, not just your wage garnishments.