Are you plagued by the question, “Will bankruptcy stop a wage garnishment?” You’re not alone. Confronting wage garnishment can be a terrifying ordeal. In this comprehensive guide, you’ll discover the answer to this pressing question and explore the implications of personal bankruptcy in this context.
Understanding Wage Garnishment
To comprehend the relationship between bankruptcy and wage garnishment, it’s crucial to first understand what wage garnishment is.
Wage garnishment, or wage attachment, is a legal procedure where part of a person’s earnings is withheld by an employer for the repayment of a debt. This can result from various circumstances, such as unpaid taxes, child support, or consumer debts.
The Impact of Personal Bankruptcy on Wage Garnishment
Personal bankruptcy is a legal process that helps individuals struggling with debt get a fresh financial start. But will bankruptcy stop a wage garnishment? The simple answer is yes.
Upon filing for personal bankruptcy, a legal “stay of proceedings” is automatically enacted. This stay prevents creditors from starting or carrying on with any proceedings to recover their debt. Consequently, wage garnishments and collection calls come to a halt.
The Role of a Licensed Insolvency Trustee
A Licensed Insolvency Trustee (LIT) is a professionally licensed individual who can provide advice and services to individuals and businesses with debt problems.
When filing for bankruptcy, your LIT will request the contact details of your company’s payroll department and the creditor garnishing your wages. After filing, the LIT will inform both parties of your bankruptcy. This action leads to the cessation of wage garnishments.
More about Wage Garnishment and Bankruptcy
Furthermore, if your payroll department has already sent money to the Court Sheriff’s office as part of the garnishment process, your LIT can intervene.
The LIT will issue a letter to the Sheriff’s office, demanding a return of the garnished funds before they’re given to the creditor. This course of action provides an additional layer of protection for your wages.
A Deeper Look into the Bankruptcy Process
Remember, bankruptcy is a complex process with serious legal and financial consequences. It’s essential to seek professional advice to understand all your options. So if you’re still wondering, “Will bankruptcy stop a wage garnishment?” rest assured, bankruptcy can indeed offer a solution to wage garnishment, but it should always be considered as a last resort.
