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Chances are, if you’re reading this webpage then your debt has gotten so out of control that creditors are now taking a portion of your paycheck to cover your past-due debt. When you think about it, wage garnishment is like adding insult to injury. If you already can’t repay a debt, how will you ever get ahead financially if you suddenly have less money?
While you may think your situation is unique, keep in mind that the overwhelming majority of people who file for bankruptcy are hard-working Americans who fell behind on bills through no fault of their own. One car crash or illness is all it takes for a savings account to quickly run dry. Losing a job, death of a spouse, or even a divorce can lead to a series of events that eventually result in wage garnishment.
Indeed, many hardworking Coloradans have never heard of wage garnishment until it happens to them.
Having an involuntary wage garnishment placed upon you can most definitely cause tremendous stress on the ability to pay your daily living expenses. Wage garnishment can be embarrassing and unbearable, however, you have options! By filing for bankruptcy protection, you can stop wage garnishment and gain a new fresh financial start in life.
The decision to file for bankruptcy is often one of the hardest choices that a person must make in their lifetime. Poor planning can often make the process even harder. It goes without saying that other debt-relief options should be explored before filing for bankruptcy.
That’s where our experienced Denver debt relief attorneys can help. If your debt has become so unmanageable that you are in danger of foreclosure, garnished wages, or repossessions, you need the help of an experienced bankruptcy lawyer who is capable of ensuring you avoid the serious pitfall of wage garnishment.
Wage garnishment, also frequently called wage attachment or wage withholding, is when a creditor takes money from your paycheck before you receive it.
Through wage garnishment, your employer will receive a court order instructing them to deduct a portion of your paycheck to settle your outstanding debt.
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 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 Denver 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.
For more information on Denver’s wage garnishment laws, visit Debt.org’s breakdown of the garnishment process or contact an experienced Jefferson County area bankruptcy attorney.
If you’re facing wage garnishment in Denver, it’s important to learn about your rights and options.
If your wages or accounts are being garnished, you can stop the garnishment and deal with the underlying debts, once and for all, through bankruptcy. For individuals seeking debt relief through bankruptcy, 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 Denver, 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 Denver 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 CO bankruptcy attorneys would be happy to explain to you during your initial case consultation.
For petitioners seeking to file Chapter 7 bankruptcy in Denver, 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 (or erased) 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.
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. It is possible the garnishments will 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 Denver County bankruptcy attorney. Our team of legal professionals can examine your situation and recommend the best way to proceed.
It is not uncommon for people to have questions regarding their rights, their future, and their finances when they are weighing debt relief options such as bankruptcy. If you are considering filing for bankruptcy, or if you are interested in learning more about this process, do not hesitate to contact our experienced Denver bankruptcy attorneys. We service clients all over Colorado, including:
Our firm has decades of experience providing outstanding representation to our clients throughout Denver, and we may be able to help you as well. Find out today by contacting us for your own free consultation. We charge flat fees, which makes it possible for anyone to file for bankruptcy.