How Bankruptcy Stops Wage Garnishment
Filing bankruptcy triggers the automatic stay under Section 362, immediately halting most wage garnishments. The stay takes effect the moment the petition is filed.
The automatic stay stops: Wage garnishments, bank levies, lawsuits, foreclosures, repossessions, utility shutoffs, and most other collection actions.
Exceptions
- Child support and alimony - Continue despite the stay (Section 362(b)(2))
- Some tax garnishments - IRS can sometimes continue certain actions
- Criminal restitution - Generally not affected
Repeat filers: If you had a case dismissed within the past year, the stay may be limited (362(c)(3)) or absent (362(c)(4)). See stay limits.
Recovering Garnished Wages
Wages garnished within 90 days before filing may be recoverable as preferential transfers under Section 547.
If Garnishment Continues After Filing
- Send written notice of filing to employer and creditor
- Keep records of every paycheck showing continued garnishment
- Ask the court to enforce the stay - recover damages under Section 362(k)
Emergency Filing
You can file a "bare bones" petition with just the fee and basic forms. The stay takes effect immediately. You have 14 days to file remaining schedules.
If your attorney failed to file for bankruptcy protection in time to stop a garnishment, this may be attorney malpractice.
Frequently Asked Questions
What is wage garnishment?
Wage garnishment is a legal process where a court orders your employer to withhold a portion of your paycheck and send it directly to a creditor to satisfy a debt. Most garnishments require a court judgment first, though child support, federal taxes, and student loans can be garnished without one.
How much can creditors garnish from my paycheck?
Federal law limits creditor garnishment to 25% of your disposable earnings or the amount by which your weekly pay exceeds 30 times the federal minimum wage, whichever is less. Child support and alimony can take up to 50-65%. Some states impose stricter limits that protect more of your wages.
Can I stop wage garnishment without filing bankruptcy?
Yes, in some cases. You can file a claim of exemption if your income is protected or the garnishment causes undue hardship. You can negotiate a payment plan with the creditor in exchange for releasing the garnishment. You can also pay the judgment in full. However, bankruptcy is often the fastest and most complete solution.
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Related Resources
automatic stay protection in bankruptcy - Complete guide to the automatic stay
relief from stay motions - When creditors ask to lift the stay
step-by-step bankruptcy filing guide - Step-by-step filing guide
Related Guides
Browse by State: Wage Garnishment Rules by State
State-specific rules, federal court data, and practical guidance for every state and DC. 51 pages total.