Side-by-Side Comparison
| Factor | Wage Garnishment | Bankruptcy |
|---|---|---|
| Amount taken | Up to 25% of disposable earnings | $0 (garnishment stops) |
| Duration | Until debt fully paid (years) | Ch.7: 3-4 months. Ch.13: 3-5 years. |
| Interest continues? | Yes - debt grows while garnished | No - debt eliminated at discharge |
| Other debts addressed? | No - only the garnishing creditor | Yes - all eligible debts discharged |
| Credit impact | Judgment + garnishment on record | Bankruptcy on record 7-10 years |
| Cost | $0 upfront, but total cost is full debt + interest | $1,500-$2,500 (Ch.7) or $3,000-$6,000 (Ch.13) |
| Fresh start | No - only one debt addressed | Yes - comprehensive debt relief |
The Real Cost of Garnishment
Garnishment looks "free" because there is no upfront cost. But the true cost is enormous:
- 25% of every paycheck for months or years
- Interest continues accumulating on the unpaid balance
- Only one debt is addressed - if you owe multiple creditors, others can also garnish
- No relief from other debts - medical bills, credit cards, and other obligations remain
- Psychological toll - the uncertainty of not knowing when it will end
Example: A $10,000 judgment at 10% interest, with 25% garnishment of $3,000/month take-home pay: $750/month garnished. It takes approximately 15 months to pay off - during which you pay $1,250+ in interest. A Chapter 7 would eliminate the entire debt in 3-4 months for approximately $1,800 total.
When Bankruptcy Is the Better Choice
- Multiple debts: Garnishment only addresses one creditor. Bankruptcy addresses all eligible debts at once.
- High-interest debt: If interest is accumulating faster than garnishment is paying it down, you may never pay it off.
- Other collection actions: If you face lawsuits, repossession, or foreclosure in addition to garnishment.
- Need a fresh start: Bankruptcy provides a defined endpoint and discharge - garnishment just reduces one debt slowly.
The key question: Will you be debt-free faster through garnishment or through bankruptcy? In most cases, bankruptcy provides faster, more complete relief at a lower total cost.
When Garnishment May Be Acceptable
Garnishment may be the better choice if:
- The amount owed is small and will be paid off quickly
- You have assets you want to protect that might not be exempt in bankruptcy
- The debt is nondischargeable (child support, recent taxes, student loans)
- You recently received a bankruptcy discharge and are barred from filing again
Related tools: Discharge eligibility screener | Chapter 7 vs. Chapter 13
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