Stopping a garnishment of wages by filing Chapter 7 bankruptcy is possible in most cases. Bankruptcy does not discharge domestic support obligations so if you are getting garnished for your alimony or child support, those garnishments will not be stopped.
What Is Garnishment?
Garnishment is called a ‘wage attachment’, in which creditors go after your paycheck to pay back a debt that you owe them. Creditors must bring a lawsuit against you in court and obtain a judgment before they can attach your wages. The only exceptions are IRS, state tax authorities and federal student loan creditors. Once the creditor has obtained a judgment, the court will issue an order for garnishment to your employer, who is obligated to withhold a portion of your paycheck every pay period and to send that amount directly to the creditor. Federal and state regulations govern how much of your earnings that your employer can withhold. In Kansas, the limit is 25%.
Stopping A Garnishment
When you file Chapter 7 bankruptcy, you must provide the court with a list of your creditors and their addresses. The court will then notify each creditor that you have filed for bankruptcy protection. You also can send a copy of your bankruptcy filing to the creditor yourself (which can sometimes speed up the process) In our office, an attorney might contact a creditor’s attorney directly to speed up a garnishment release.
An automatic stay is an order issued by the court that prohibits most creditors from continuing with collection actions. Automatic Stay is what protects wages from further garnishments (unless it is child support or maintenance, in which case automatic stay does not apply). The creditor must then file the appropriate paperwork to release the wage garnishment. A creditor can ask the bankruptcy court to lift (remove) the automatic stay, but in most cases, the court does not do this.
There are Federal laws that protect you from retaliation by your employer when the garnishment was issued from a single creditor for one debt
When Does The Automatic Stay End?
In most cases, when your bankruptcy case ends so does the automatic stay. If the debt at issue was included in the discharge, the creditor must take steps to never collect on the debt again. In the event you do not get a discharge, the creditor can continue garnishing your wages.
In Kansas, a garnishment on your wages is limited to 25% of your income after required deductions are made. The exception to this is for child support which has a different formula. There are no garnishment limits for the IRS and Kansas Department of Revenue. The limit for federal student lenders is 15%.
It takes a few days to get a garnishment turned off after filing bankruptcy, so the sooner you meet with your bankruptcy attorney, the sooner they can get things moving.
Depending on the circumstances, the bankruptcy trustee can recover money garnished by your creditors prior to filing. You may not get the money back, but it may be used to pay other creditors, like some tax debts or child support, that cannot be discharged in bankruptcy. You will recover garnished money for wages paid for time worked after you filed a bankruptcy case.
The attorneys at Coons & Crump, LLC, can advise you of the advantages of stopping a garnishment through bankruptcy and will guide you through the entire process.
To schedule a FREE consultation, please call our office located nearest to you or visit us ONLINE.
Lawrence (785-856-8720) Overland Park (913-353-4044) Topeka (785-783-2360).