Understanding How A Bankruptcy Can Affect Your Wage Garnishments

Many people believe that filing for bankruptcy will also eliminate their court ordered wage garnishments. If you're filing specifically for that reason, you need to stop and reconsider. If you're filing, and your debts include wage garnishments, then you need to understand how bankruptcy will affect those garnishments.

Different Rules for Different Types of Garnishments

What type of garnishment do you have attached to your wages? Generally, a court can award a judgement for various things, and order a garnishment. To see how bankruptcy affects them, you will have to look at them individually.

Loan repayment garnishments

Bankruptcy can wipe out garnishments related to unsecured debt, such as a credit card debt or personal loan. The bankruptcy process will put a stay, or stop, on collection for these types of garnishments. The process will also discharge these debts. You will not have to worry about them.

Student loan related garnishments

A bankruptcy can put a stop to the collection of payments on student loan garnishments. The bankruptcy will not discharge a student loan debt. After the bankruptcy proceedings, collection on these garnishments can continue.

A bankruptcy can discharge a student loan garnishment in some limited circumstances. These circumstances can vary depending on your state, who owns the loan, and your personal situation. It's an uncommon series of events that leads to such a discharge.

State and federal tax levies

The way bankruptcies deal with state tax levies will of course vary by state. Usually, the bankruptcy can put a stay on state tax levies, but those garnishments can come back into play as soon as the bankruptcy period ends. The same rules apply for federal taxes.

Spousal and child support

Usually, bankruptcy does not discharge domestic support obligation. In addition, a stay will not stop collection of support through garnishments. There are some narrowly defined methods in which a bankruptcy can discharge a support obligation, but the odds of these specific situations occurring are low.

Different Rules for Different States and Situations

A lot of the general rules concerning bankruptcy and garnishments can vary from state to state. Your own personal bankruptcy situation and method can dictate how garnishments are handled as well.

Before pursuing a bankruptcy, consider whether it will in fact eliminate your court ordered garnishments. You wouldn't want to start the process only to find out it was pointless for you to do so. You should speak with a local bankruptcy attorney, such as Jeffrey S Arnold Attorney At Law P.C., about what you should expect.


Share