Wage Garnishment Under Bankruptcy Law
Wage garnishment occurs when a court issues an order that requires your employer to withhold a portion of your paycheck and send it directly to a person or entity to which you owe money. Generally, garnishment lasts until a particular debt is fully paid off. The debts for which a wage garnishment order may be entered include child support, student loans, taxes, and any debts that have been the subject of a collections lawsuit resulting in a judgment against you and a wage garnishment order. Except in the cases of child support, student loans, and taxes, a creditor cannot garnish your wages without first suing you, winning, and obtaining a court order.
An automatic stay issued during bankruptcy will immediately halt most wage garnishments, but a filer may still need to pay the debt eventually.
If a creditor wins a lawsuit, and a money judgment is entered on its behalf, the creditor can garnish your wages by giving a copy of the court order to the local sheriff, who then sends it to your employer. Federal and state regulations govern how much of your paycheck may be garnished. Under federal law, the lower of (1) up to 25% of your disposable earnings or (2) the amount by which your weekly income exceeds 30 times the minimum wage may be garnished. However, in some states, a lower percentage limit is set for the amount of your wages that can be garnished. Different rules apply to child support, student loans, and taxes.
Your employer may not retaliate against you because your wages have been garnished to pay off a single debt. However, under federal law, you are not protected against retaliation when more than one creditor has garnished your wages or your wages are being garnished by a single creditor for two or more debts. Some state laws provide more protection against retaliation.
Fighting Wage Garnishment
You can protest wage garnishment by filing papers and proving to the court that you need more of your paycheck to pay off your expenses or that you qualify for an exemption. If the judge will not terminate the garnishment, in some cases, filing for bankruptcy can stop wage garnishment. However, you should be aware that bankruptcy will not stop garnishment of child support or other non-dischargeable debts.
Once you file for bankruptcy, an automatic stay will go into effect. This stops most collection activities, including wage garnishments, as long as the stay is in effect. The court will notify your creditors of the stay, but if the creditors are not alerted in time to stop wage garnishment, you can give notice of the bankruptcy to your employer’s payroll department, as well as the levying officer handling the wage garnishment (in most cases, the sheriff).
An automatic stay will not affect child support or alimony, since these are priority debts that are non-dischargeable. When any creditor that is affected by the stay wants to continue its collection efforts, it must prove to the court there is good cause to lift the stay. Generally, unsecured creditors that want to continue garnishing your wages cannot present good cause to get a stay lifted.
After a bankruptcy case ends, and a filer’s debts are discharged, creditors may only resume garnishments on non-dischargeable debts.
Other than when the bankruptcy court lifts the stay on a creditor’s motion, an automatic stay will end when you receive a bankruptcy discharge or when the case is dismissed without a discharge. If the debt at issue was included in the discharge, the creditor will not be able to resume wage garnishment. However, if you do not get a discharge, the creditor can continue wage garnishment.
In some cases, you can also recover back wages that were garnished within 90 days prior to your filing of bankruptcy, when they are over $600 altogether (this amount changes periodically) and you have exemptions that cover them.
Bankruptcy Law Center Contents
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Bankruptcy Law Center
- Automatic Stays Under Bankruptcy Law
- Chapter 7 Bankruptcy Law
- Chapter 13 Bankruptcy Law
- Chapter 11 Bankruptcy Law
- Chapter 12 Bankruptcy Law
- Repeat Bankruptcy Filings & Legal Requirements
- Business Bankruptcy Law
- Emergency Bankruptcy Filings & Legal Requirements
- Involuntary Bankruptcy Filings & Legal Requirements
- Credit Counseling and Debtor Education Courses Legally Required for Bankruptcy
- Joint Bankruptcy Petitions for Married Couples & Legal Implications
- Bankruptcy Exemption Laws
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Collections Laws and Bankruptcy
- Creditors' Legal Rights in Bankruptcy
- Medical Bills Under Bankruptcy Law
- Non-Dischargeable Debt Under Bankruptcy Law
- Credit Card Debt Under Bankruptcy Law
- Student Loan Debt Under Bankruptcy Law
- Vehicle Repossessions & The Legal Impact of Bankruptcy
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Wage Garnishment Under Bankruptcy Law
- Charge Offs in Bankruptcy Law
- Contingent, Unliquidated, and Disputed Claims Under Bankruptcy Law
- Personal Guarantees Under Bankruptcy Law
- Fraud-Related Debts Under Bankruptcy Law
- Bankruptcy Legal Procedures
- Eviction Legal Issues Related to Bankruptcy
- Foreclosure Legal Issues Related to Bankruptcy
- Lien Avoidance Under Chapter 7 Bankruptcy Law
- Lien Stripping Under Chapter 13 Bankruptcy Law
- How Unemployment Can Legally Affect Filing for Bankruptcy
- Protecting Your Assets During the Bankruptcy Legal Process
- Tax Law Issues Related to Bankruptcy
- Alternatives to Bankruptcy Under the Law
- Bankruptcy Legal Forms
- Elderly People Filing for Bankruptcy & Distinctive Legal Concerns
- Divorce Law Issues Related to Bankruptcy
- Preparing for the Bankruptcy Legal Process
- Employment Discrimination Laws Related to Bankruptcy
- Working With a Bankruptcy Lawyer
- Bankruptcy Law FAQs
- Find a Bankruptcy Lawyer
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