How To Stop Wage Garnishment

If you’ve been out of work for a while, you might be behind on your bills. That means some creditors could garnish your wages to recoup the arrearages. This blog post will discuss how bankruptcy can stop wage garnishment. 

Contact a bankruptcy attorney in Encino at SM Law Group for a free consultation if you have a wage garnishment notice.

What is Wage Garnishment?

The amount a creditor can garnish is limited by law. Creditors can only take a certain percentage of disposable earnings; this is the amount you receive after certain deductions. In some cases, a locality might have a mandatory deduction, which is also excluded from wage garnishment. In most cases, the deductions include taxes, Social Security, Medicare, state and local taxes, including state income tax, and mandatory deductions for employee retirement accounts.

A creditor can not take more than 25% of your disposable earnings each week, or 50% of the difference between your disposable earnings and the minimum wage for your area, whichever is lower.

How to Stop Wage Garnishment

The one thing about wage garnishment is that a creditor can only take a percentage of your paycheck. However, if your circumstances force you into needing all of the income from that job, you can stop a wage garnishment by some creditors by filing bankruptcy.

Depending on your circumstances, you could file Chapter 13 reorganization or Chapter 7 liquidation. If you have a home with plenty of equity in it, you should file Chapter 13 so that you do not lose your home. However, if you rent, are underwater on a mortgage, or have very little equity built up in your home, you can file Chapter 7 and still keep your home.

Chapter 13 lasts three to five years, while the court could discharge a Chapter 7 bankruptcy in 60 to 90 days. Chapter 13 takes some time as you make monthly payments into a plan. The bankruptcy trustee pays certain creditors with the payment. Once the court discharges the Chapter 13, the debts are discharged, even if you did not pay the total amount of the arrearages. In some cases, some arrearages are not paid at all, depending on the amount you can contribute to the plan and the number of priority creditors you have.

Other Ways to Stop Wage Garnishment

You have one other way to stop a wage garnishment. If you have savings, you can pay the amount due in one lump sum. You could also pay some of the amount owing and arrange with the creditor to stick to a payment plan.

Contact an Encino Bankruptcy Attorney

If you received a garnishment notice, even if you are not working, contact an Encino bankruptcy lawyer at SM Law Group to learn more about stopping wage garnishment.