Stop Wage Garnishments with Bankruptcy
At Pioletti Pioletti & Nichols we are committed to working with people to help them obtain debt relief and stop Wage Garnishments. Call us at 309-467-3213 to schedule a free consultation.
What Is A Wage Garnishment?
A wage garnishment is a mechanism for collecting a debt. Typically a creditor must first obtain a judgment in court for the amount of money owed. They then take that judgment to your employer whereby the employer is mandated by law to begin deducting a portion of your wages each pay period. The amount that they are able to deduct depends on how much you are making. The maximum amount they can deduct is 15% each pay period.
Filing For Bankruptcy Stops Wage Garnishments
The most effective way to stop Wage Garnishments or prevent one from beginning is to file for bankruptcy. When a chapter 7 or chapter 13 bankruptcy is filed an automatic stay goes into effect. Even though it may be a week or more before the garnishment is removed, any money garnished after the bankruptcy is filed will be returned. In addition to wage garnishments, repossessions, bank account garnishments, and creditor calls and letters will stop as well.
Halt Before Filing for Bankruptcy
Before filing for bankruptcy, it is important to consult with an attorney at Pioletti Pioletti & Nichols to ensure this is the right decision for your financial future. Some people jump into filing for bankruptcy before they even know what it fully entails. It is a common misconception that under bankruptcy, a person’s debts get eliminated completely. Well, this is more of an exception and not the general rule for most people.
Our law firm can help you figure out whether bankruptcy is in your best interest, in addition to offering guidance as you go through the following steps:
Taking an Inventory of Finances
If you are unsure where your finances currently stand, a Wage Garnishments attorney can help you assemble your financial information. We will need pertinent financial documents related to your income, debts, assets and property, and monthly living expenses. During your meetings with a member of our legal team, we may ask questions related to:
- Debts: creditor’s name, your debt balance, interest rate, and minimum monthly payments.
- Income: the total of everything you have earned through your job or other means in the past 6-12 months, how often you are receiving this money, and who is paying you this amount. This includes unemployment compensation, dividends/interest from investments, side jobs, pensions, employment earnings, and any other outlets.
- Assets/Property: savings accounts, stocks, property with value, vehicles, art collections, clothing, personal possessions, home furnishings, and other valuable items.
- Monthly Living Costs: how much you pay in rent, groceries, utilities, mortgage, clothing, medical premiums, transportation, and any other expenses related to necessary living.
Credit Counseling and Creditor Meeting
You may have to go through credit counseling from a reputable and approved company six months prior to submitting your bankruptcy petition. As a Wage Garnishments attorney may tell you, this agency can help you decide what kind of bankruptcy chapter is most suitable for your situation. When filing your petition, you may have to show proof that you underwent credit counseling.
After filing your petition for bankruptcy, your creditors will be notified. A meeting will be scheduled where you may be questioned by a representative hired by your creditors. You will be made aware of what kind of consequences that declaring bankruptcy can have and whether you want to move forward with pursuing bankruptcy. The representative of the creditors may ask questions to evaluate whether you are filing for bankruptcy out of personal gain or to “trick” the system. If all goes smoothly, then you will move forward to being approved to operate under a specific bankruptcy chapter.
While this may sound like an intimidating process, filing for bankruptcy can be a helpful resource for people who are truly struggling. We can evaluate your finances to see if bankruptcy can benefit you now and in the future. If your employer has been forced to use Wage Garnishments against you by the court, contact Pioletti Pioletti & Nichols for a free consultation to discuss what options you may have.
Frequently Asked Questions Regarding Wage Garnishments
Facing wage garnishments can be a terrifying prospect as most people can not afford to have some or all of their wages taken from them, despite having debts that need to be paid. When a debtor cannot pay their creditor, they may take them to court to receive a court order, which requires their employer to withhold a portion of their paycheck that the creditor may be entitled to. There are several reasons that a person may be facing wage garnishment, and debtors need to understand their rights so that they may learn how best to face the situation they find themselves contending with. Pioletti Pioletti & Nichols can play a crucial role in assisting debtors in making decisions regarding the path forward and answering their numerous questions.
What are common reasons that wages may be garnished?
Facing wage garnishment can be a terrifying prospect, especially considering that it can leave the person facing this type of proceeding seriously financially impacted. First, it will be necessary to understand why wages are being garnished so that they can determine how best to respond. Wages may be garnished to pay outstanding child support payments, delinquent taxes, consumer debts, student loans, etc. Most people will want to know how much of their wages they stand to lose to repay these debts, and it’s essential to be aware that this will vary depending upon the type of debt. For example, wage garnishments for child support can be up to 60% of wages, sometimes more. Yet, for consumer debts, it can be a maximum of 25% of a person’s disposable wage. The IRS typically determines the amount taken from a paycheck based on several factors.
Who determines whether a person’s wages are garnishments?
Wage garnishments typically occur through the legal process, where a third party, or the debtor’s employer, must withhold a specified amount of money from a person’s earnings. Typically, this process occurs through a court order and has specific expectations surrounding how much can be withheld. However, it’s essential to keep in mind that, much of the time, a legal process will ensue. However, be aware that in most cases, when the IRS is attempting to withhold wages, they may not require a court order.
When does wage garnishment end, and how does it impact a person?
Wage garnishments can have many implications that could create hardship for a person at risk of having a portion of their wages withheld to pay debts every month. While approximately 60% of people live paycheck to paycheck, when a person is also unable to pay their debts, chances are they struggle to keep up with their obligations and their ability to make ends meet. When a person has their wages garnished, this could add further complications in keeping up with basic living expenses. When a person has their wages garnished (after exhausting options to prevent it from happening), there are typically only a few available options, either pay off the outstanding debt or consider filing for bankruptcy, which may discharge a large portion of the debtor’s financial obligations.
What are the options for stopping wage garnishment?
When a person is at risk of having their wages garnished or has already experienced wage garnishment, it will be essential to understand the options that may be available. However, how a debtor and their lawyer move forward will depend upon the type of wage garnishment occurring. Keep in mind that wage garnishment typically isn’t the first step towards settling a debt. Often, creditors will first attempt to collect the debt in other ways. However, wage garnishment may be the next step when these efforts fail. Consider the following options:
- Consolidating debt so that it is more manageable
- Speak with a debt counselor
- Negotiate a smaller payment with the creditor
- Consider settling the debts for a lowered amount
- Consider a wage garnishment exemption to prevent losing specific types of income
- File for bankruptcy to halt collection activity
What are the advantages of hiring a lawyer?
When a person is facing or experiencing wage garnishments, it can be challenging to know where to turn. However, a lawyer can offer several critical advantages for a debtor, like advising their clients on the possible options, helping to decipher complicated legal issues, negotiating with creditors, or determining whether exemptions are available.
To learn more about how our lawyer from Pioletti Pioletti & Nichols can help with issues surrounding wage garnishments, schedule a consultation as soon as possible.