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The sad truth is, in the current economic climate, it doesn’t take much to throw off a person’s financial stability. One stutter, one misstep, one accident, one illness, and you may find yourself struggling to keep up with mounting bills.
It may be a bitter pill to swallow, but the fact is, creditors don’t care about your financial difficulties. Lenders are in the business of making money. And when their letters and calls go unanswered, most creditors escalate to the next step to get the money they’re owed, which is wage garnishment.
Wage garnishment is when a lender takes a chunk out of your paycheck to pay back money you borrowed. Obviously, if you’re already having trouble keeping up with bills, having your wages garnished is going to make your life even more difficult.
When you’re already living paycheck to paycheck, a wage garnishment can wreak havoc on your finances. Instead of letting a creditor take money out of your paychecks, it may be time to consider filing for bankruptcy.
Our experienced Aurora bankruptcy attorneys have found that many of our debt relief clients initially viewed bankruptcy as an intimidating or even shameful process. But by the time their Chapter 7 or Chapter 13 bankruptcy cases settled, they ended up feeling empowered. With bankruptcy, you get to take back control of your financial life. Make today the day you take the first step towards finally living the life you always think about.
Wage garnishment, also frequently called wage attachment, wage withholding, bank levies, or just garnishment occurs when money is withheld from your paycheck. This typically occurs after a creditor obtains a judgment in a lawsuit, and then gets a court order to garnish wages.
The court order is called a writ of continuing garnishment, and the only way a creditor can force a garnishment is through litigation, although there are exceptions to this rule. The creditor will continue to garnish your earnings until you pay off the amount or take action to halt the garnishment, such as filing an exemption with the court or filing for Chapter 7 or Chapter 13 bankruptcy.
Some debts do not require a legal order to have your wages garnished. The exceptions to the writ of continuing garnishment are
Additionally, the amount that may be garnished from your paychecks for these types of debts differs from that of judgment creditors. For more information on the writ of garnishment and its exceptions, please speak to one of our Aurora bankruptcy attorneys.
Filing for Chapter 7 or Chapter 13 bankruptcy is the most practical way to stop wage garnishment in Aurora. This is especially true if you owe other creditors that aren’t currently garnishing your paychecks, but are still significant enough to contribute to your financial distress.
Once you file for either Chapter 7 or Chapter 13 bankruptcy with the help of your experienced Aurora bankruptcy attorney, you are immediately protected by the automatic stay. This legal provision means that creditors can’t call you, write to you, or sue you for the duration of your bankruptcy case. The automatic stay will also stop current lawsuits and garnishments. That means any debt collectors who have been harassing you via phone, e-mail, or letter in an attempt to collect a debt must immediately halt all contact or risk punishment from the United States Bankruptcy Court-District of Colorado court.
There are, of course, a few exceptions to the automatic stay, which our helpful Colorado Springs debt relief lawyers would be happy to explain to you during your initial case consultation.
For petitioners seeking to file Chapter 7 bankruptcy in Colorado, the entire process from start to finish is relatively quick, lasting between 4-6 months from start to finish. During Chapter 7 bankruptcy, which is commonly referred to as “simple bankruptcy” or “liquidation bankruptcy,” a court-appointed bankruptcy trustee collects all of your assets and sells any assets which are not exempt. The net proceeds of the liquidation are then distributed to your creditors. Whatever unsecured debt remains after the liquidation is then discharged by the court.
It’s important to note that certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, and student loans. If your wages are being garnished for any of the above reasons, the garnishment will continue as soon as your bankruptcy debt has been discharged. Additionally, since those debts cannot be discharged by bankruptcy, those creditors are not beholden to the automatic stay and can continue to garnish your wages even during the bankruptcy.
Chapter 13 bankruptcy, also called a wage earner repayment plan, or reorganization bankruptcy is unlike Chapter 7 in that this form of bankruptcy requires that a debtor repay a fixed, monthly amount to his or her creditors by making a single payment over a 36 to 60-month plan. This single monthly payment is often less than the total monthly sum of all of your bills put together. If you can stick to the terms of your repayment agreement, all your remaining dischargeable debt will be released at the end of the plan.
Like Chapter 7, Chapter 13 does not halt all wage garnishment actions. If the garnished debt is federal income tax or student loans, the chances are slim that these debts will be discharged in bankruptcy. The garnishments may continue when the bankruptcy ends after the automatic stay is lifted. This is true for alimony and child support debt as well. Unless you catch up on the debt during the bankruptcy process or create some repayment plan as part of the bankruptcy, the wages will remain attached to the debt and the garnishments will resume.
Our knowledgeable CO bankruptcy attorneys specialize in helping individuals seek debt relief through Chapter 7 and Chapter 13 bankruptcy in Aurora and the surrounding areas. Bankruptcy cases are complex and require a careful and attentive approach; we do not recommend trying to navigate the Byzantine Federal Bankruptcy Code without experienced legal help. Contact our firm for a free case consultation today.
When you’re deep in debt and creditors are harassing you for payment, it can be overwhelming. Especially if you don’t see a way to get out of the financial hole you’re in. When phone calls and letters go unanswered, some creditors may escalate. The next thing you know, a court order is garnishing your paycheck, leaving you with even less than you had before to pay your bills.
The good news is, you don’t have to go through this alone. Help is only a phone call or email away. If you are the subject of a wage garnishment or have been served a notice of an application for a garnishment, you should immediately contact a qualified Arapahoe County bankruptcy attorney to determine whether a bankruptcy filing is called for and what your remedies may be. Our law firm provides a free case consultation to new clients and offers low flat fees for clients filing for Chapter 7 or Chapter 13 bankruptcy in Aurora county.
With more than 50 years of collective experience, we are well equipped to ensure you fully understand your bankruptcy options so that you can make informed choices. Bankruptcy is a legal tool that frees countless Americans from the burden of debt every year. We can help you take the next step toward financial freedom.