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Having your paycheck garnished can be catastrophic for the finances of a household. If you’re already behind on bills and struggling to follow a budget, the idea of losing money that you had already earmarked for another bill can be a huge setback.
For many Colorado Springs families, wage garnishment can be the beginning of the slide into financial ruin. Falling behind on bills happens for all sorts of reasons, and it’s seldom because someone was lazy or unwilling to work. The overwhelming majority of people in America that file for bankruptcy are hard-working family-minded people who fell victim to bad luck or illness. In fact medical debt is the number-one reason why people file for bankruptcy.
Fortunately, there are options available, including bankruptcy, and one of our experienced Colorado Springs bankruptcy attorneys can help you find the best one for your family.
You have several available options for stopping a wage garnishment in El Paso county. Those options include paying off the debt and avoiding judgment from creditors, appealing to the court, negotiating a payment plan, or filing for bankruptcy. This website was designed to provide you with general information on filing for either Chapter 7 or Chapter 13 bankruptcy in Colorado Springs to halt your wage garnishments and help you achieve debt relief.
A wage garnishment, also frequently called wage attachment or wage withholding is when a creditor takes money from your paycheck before you receive it.
If your paycheck or your bank account is being garnished, that means that your creditors have filed a lawsuit against you and won a court order that entitles them to take money directly from your paycheck or bank account to pay for your outstanding debts.
In Colorado, the court order is called a writ of continuing garnishment, and the only way a creditor can force a garnishment is through litigation. 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 through filing for Chapter 7 or Chapter 13 bankruptcy.
It’s also worth noting that certain types of debt such as
do not require a writ of continuing garnishment from the court in order to pursue wage garnishment. Additionally, the amount that may be garnished differs from that of judgment creditors.
How much your paycheck will be garnished for creditors seeking garnishment through a Writ of Continuing Garnish is determined by Colorado house bill 19-1189, which says
“THE AMOUNT OF YOUR DISPOSABLE EARNINGS THAT CAN BE GARNISHED IS DETERMINED BY COMPARING TWO NUMBERS: (1) 20% OF YOUR DISPOSABLE EARNINGS AND (2) THE AMOUNT BY WHICH YOUR DISPOSABLE EARNINGS EXCEED 40 TIMES THE MINIMUM WAGE. THE SMALLER OF THESE TWO AMOUNTS WILL BE DEDUCTED FROM YOUR PAY.”
Before determining how much of your income might be subject to a garnishment, it should be noted that several types of income are entirely protected (or “exempt”) from garnishment. These include Social Security benefits, Supplemental Security Income benefits, and Veterans benefits, among other things.
If you’re curious about wage garnishment calculations and exemptions, be sure to visit the U.S. Department of the Treasury’s website Administrative Wage Garnishment Calculator.
And for more information on Colorado’s wage garnishment laws, visit Debt.org’s breakdown of the garnishment process or contact an experienced Colorado Springs bankruptcy attorney.
Bankruptcy is the most practical way to stop wage garnishment in El Paso county. Especially if you have other debts that can be discharged under the Federal Bankruptcy Code.
For individuals seeking debt relief through bankruptcy in Colorado Springs, the two most common bankruptcy filings are Chapter 7 and Chapter 13.
As soon as you file for either Chapter 7 or Chapter 13 bankruptcy in Colorado, the law immediately begins protecting you from creditors by imposing an automatic stay. The stay prohibits creditors from taking any collection activity against you during your bankruptcy case. 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.
It also means that because wage garnishment is considered a collection action, wage garnishments must stop once you file for bankruptcy. There are a few exceptions to this prohibition, which our experienced Colorado Springs bankruptcy attorneys 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.
To learn more about whether Chapter 7 or Chapter 13 bankruptcy would be able to effectively address your wage garnishment problem, contact an experienced Arapahoe County area bankruptcy attorney. Our team of legal professionals can examine your situation and recommend the best way to proceed. Talk to one of our CO bankruptcy lawyers today to learn more.
You may have tried everything under the sun to avoid bankruptcy while facing creditor harassment, wage garnishment, collection agencies, penalties and fees on credit card debt or delinquent taxes, and other challenges. In tough situations like this, filing for bankruptcy may be the right move for you, ending a dire situation that will likely only get worse.
Take action to protect your wages and financial future before reduced wages create an even more serious money crisis for you or your family. Every day you delay is another day you lose money to your creditors. Fortunately, our Colorado Springs bankruptcy attorneys can get you filed within a few business days, so contact us today for a free case consultation to get the ball rolling.