Will Bankruptcy Stop Wage Garnishment?

Many people who have fallen behind on loan obligations have been harassed by collection agencies, received IRS notifications and have even had their wages garnished.

Fortunately, for those who are under constant stress from these issues that result from unpaid debts, bankruptcy provides relief through what's known as an automatic stay.

What Is An Automatic Stay?

When any individual files for bankruptcy, an automatic stay immediately goes into effect. This means that actions by creditors — must "stay" or stop immediately.

As long as the bankruptcy is pending, lenders must cease all harassment or collection attempts, including bank account or wage garnishment.

In some cases, debtors who have had their wages garnished by a lender within 90 days of filing for bankruptcy may even be eligible to receive a certain portion of those wages back.

Lenders are forever barred from garnishing wages or otherwise collecting on debt included in a bankruptcy that has been successfully discharged.

Exceptions To The Automatic Stay

The automatic stay for wage garnishment applies in most situations, but not all.

If a debtor is having wages garnished because of past due child support, for instance, the automatic stay will, unfortunately, not stop the garnishment under the law.

Since domestic obligations like these are considered nondischargeable debt in bankruptcy, the lender can continue with the garnishment (regardless of the automatic stay) and the debtor will still be responsible for any amounts owed.

Individuals who are currently having wages garnished are encouraged to reach out to a bankruptcy lawyer to learn more about the turnaround time to stop the garnishment.

Appointments are available at any one of our four office locations in New Bern, Greenville, Jacksonville and Wilmington, North Carolina.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.