How Filing Bankruptcy in Florida Can Stop Wage Garnishment
Wage garnishments can make it very difficult to maintain a budget and effectively calculate your living expenses from month to month. In most cases, wage garnishment can last until a particular debt is repaid to a creditor. These debts can include child support, student loans, or any other debts that have been the subject of a collections lawsuit.
When a wage garnishment is approved by the court, an order is sent to an employer to withhold a certain amount of wages from a person’s salary or paycheck in order to pay back the debt at hand. Under federal law, the amount of a person’s paycheck that can be withheld can be either 25% of the total or the amount by which your weekly income exceeds 30 times the minimum wage, whichever is lower.
If you have received a wage garnishment from a court due to a creditor seeking repayment of debts, there are very few options available to relieve yourself of the debt and garnishment other than paying the debt back in full. One of those options, however, may be filing a bankruptcy in Florida.
Receiving an automatic stay for your wage garnishment
When a person files for bankruptcy, the debtor immediately gets relief by what is known as an Automatic Stay. For creditors, an automatic stay means they must immediately cease from garnishing a person’s wages while their bankruptcy case is pending.
Although an automatic stay can bring great relief to a debtor filing for bankruptcy, it doesn’t go into effect for every case. Even if it does, sometimes it may only remain in effect for a small amount of time. An automatic stay also does not apply to debts like child support, alimony, or any other non-dischargeable priority debts. A creditor may also request the right to continue garnishing wages, but they must prove reasonable cause to the court in order to do so.
It may take the court up to a week to notify all parties of an automatic stay, in which case you or your bankruptcy attorney can notify creditors and employers on your own by providing the case number, filing date, and location of the court. Once notification is received by the creditor, the wage garnishment must stop immediately. Violating an automatic stay by continuing collection efforts can result in legal ramifications for the creditor.
What happens with wage garnishments after a bankruptcy?
Once your bankruptcy case is finished, creditors are only able to resume garnishing wages for non-dischargeable debts such as alimony or child support. They may not continue garnishing wages for personal loans, credit cards, or any other debt that can be discharged by a bankruptcy.
If the court dismisses your bankruptcy case, creditors are able to resume wage garnishment for all debt types because this will discontinue an automatic stay.
Not all wage garnishments can be stopped by filing for bankruptcy
In a Chapter 7 bankruptcy, creditors do not have to stop wage garnishment for any non-dischargeable debts, also known as domestic debts, like alimony or child support.
For a Chapter 13 filing, all garnishments, including those for domestic debts, are stopped when an automatic stay goes into effect. This is because a Chapter 13 filing allows a person to pay off all their debts using a three-to-five year payment plan. While the payment plan is in effect, wages cannot be garnished, but if there is still an amount due at the end of the agreed upon payment plan, a creditor may seek to resume wage garnishment until they are paid.
Filing for bankruptcy to handle wage garnishment in Florida
If you are currently under a wage garnishment order in Florida and looking to discharge your debts through bankruptcy, the West Palm Beach bankruptcy attorneys at Kelley Fulton Kaplan & Eller are here to help you navigate the court system and get you the fresh start you need.