Our Kansas City Bankruptcy Attorneys Explain
Chapter 13 bankruptcy and Chapter 7 bankruptcy can help you protect important assets from creditors while discharging debts. However, there are a number of other bankruptcy mechanisms that are beneficial to filers. An automatic stay goes into effect when you file a bankruptcy petition. The automatic stay prevents creditor collection attempts from proceeding. This means that creditors must immediately stop harassing you, stop any lawsuits, and stop collecting from you in any way.
Wage garnishments are a common way creditors recover losses from debtors. Below, our Kansas City bankruptcy attorneys discuss wage garnishments and bankruptcy.
What Is Wage Garnishment?
A wage garnishment withholds and sends a portion of your wages to creditors. When you default on a debt, the creditor may seek a judgment against you to garnish your wages. In other cases, a judgment is not necessary. Certain government entities can garnish your wages without a judgment, such as the Department of Education. These are called administrative wage garnishments, and are common in cases involving unpaid child support, alimony, taxes or student loans.
Depending on the type of garnishment involved and your household, there are limits to how much a creditor can take from your wages. In Missouri, creditors can garnish up to 25 percent of your disposable income if you are not the head of a household. Creditors can garnish 10 percent if you are the head of a household. In Kansas, a state that follows federal garnishment guidelines, creditors can take 25 percent of your disposable income.
The limits are different for administrative garnishments. For a Missouri garnishment involving child support, creditors can take more than 50 percent of your wages.
Can Filing for Bankruptcy Stop a Wage Garnishment?
Bankruptcy will stop a wage garnishment. A judgment for a wage garnishment would not be able to proceed once the bankruptcy is filed, and will stop any existing garnishments. There are a few select circumstances where a creditor may be able to lift an automatic stay.
An automatic stay cannot stop an administrative garnishment for unpaid child support. This does not mean you should not file for bankruptcy, as the automatic stay can still prevent other types of new collection attempts and allow you to discharge your debts.
You may receive a discharge on certain debts at the end of your bankruptcy case. Creditors cannot resume wage garnishments on discharged debts, as you are no longer obligated to pay those debts.
Contact Our Kansas City Bankruptcy Attorneys
Whether a bankruptcy case can stop a wage garnishment depends on your individual circumstances. The best way to determine how bankruptcy could help your situation is to speak with an experienced bankruptcy attorney. Our Kansas City bankruptcy attorneys have extensive experience helping consumers and businesses file for Chapter 7 or Chapter 13 bankruptcy.
You can schedule a free initial consultation with a Kansas City bankruptcy attorney at Troppito Miller Griffin, LLC by dialing (816) 221-6006 or by using the contact form on our site.