Chapter 7 Bankruptcy Filing

Chapter 7 Bankruptcy Filing vs Garnished Wages

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A Chapter 7 Bankruptcy Filing Can often stop a wage garnishment/payroll deduction made by your employer that is normally the result of a court judgement against you when there is a failure to pay consumer debt which includes credit card, automobile, pay day and bank loans as well as medical bills. It may be beneficial to file for Chapter 7 Bankruptcy in order to stop the wage garnishment and eradicate this debt as well as all or many of the other debts that may be financially beyond your ability to pay with their high interest rates.

It is most important to contact a Chapter 7 Bankruptcy attorney to determine if you qualify to successfully file a Chapter 7 Bankruptcy and most importantly if this in your financial interest. Nonetheless, I would like to provide some information regarding wage garnishments and their elimination.

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What is Wage Garnishment?

A wage garnishment is a court order or official notice mandating an employer to collect funds from an employee’s payroll to fulfil certain court ordered financial obligations or debts. These financial obligations usually arise from court orders based on the debtor owing child support, student loans, consumer debt, medical debt, credit cards, repossessed cars, payday loans and tax levies. Income from a pension or another retirement benefit is usually treated like wages. 

Nonetheless, certain types of income can be exempt from wage garnishments/payroll deductions such as child support payments, social security benefits, supplemental security income as well as public benefits such as welfare, unemployment insurance, disability insurance. 

Furthermore, garnishments made for child support, student loans and other city, state and federal government debts/tax levies are handled differently. There are normally fewer protections for the debtor/garnishee in this type of situation. An attorney should be contacted immediately in order to obtain information regarding how to handle this type of debt/lien and garnishment. This type of debt and/or garnishment is treated differently than a garnishment or lien resulting from consumer debt such as credit card, payday, car, and bank loans. 

In California, generally, the law provides strong protection for individuals facing wage garnishment. There are limits on the amount that can be garnished: generally the lesser of 25 percent of your disposable earnings or the amount by which your weekly earnings exceed 40 times the minimum wage. 

In addition, you have the right to contest the garnishment through a claim of exemption in California or challenge the original judgement. However, there are time limits upon which you must contest the original debt and then later the garnishment. An attorney should be contacted immediately to discuss how to handle being served with the original Complaint taking the debt to trial as well as the later notice of wage garnishment. 

Before or once the garnishment begins, the filing of a Chapter 7 Bankruptcy and notifying the levying officer/local Sheriff’s office can soon often stop the garnishment of wages by the employer. Furthermore, filing a successful Chapter 7 Bankruptcy allows the debtor to eradicate all or most other debts that they may have which often allows them to begin a new financial future.