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As much as no one really wants to admit it, it doesn’t take much to upset your finances these days. One misstep, one hiccup, one accident, and you may find yourself scrambling to keep up with mounting debt.
And even though many creditors and loan companies tout their “caring and compassionate” service, the truth is, those lenders don’t care about your financial struggles. These companies are in the business of making money. And when their calls and letters go unanswered, most creditors raise the stakes to get the money they’re owed- wage garnishment.
When you’re already living from paycheck to paycheck, a wage garnishment can wreak havoc on your budget. Instead of giving in and allowing a lender to take money out of your hard-earned paychecks, money that could be used for necessities like rent or a mortgage, groceries, or the water bill, consider filing for bankruptcy.
Polite society has made talking about debt and bankruptcy a social stigma. Many clients who come to our Lakewood bankruptcy attorneys seeking debt relief feel shame and embarrassment. By the time their Chapter 7 or Chapter 13 bankruptcy cases settle, our clients leave our offices feeling empowered and debt-free.
With bankruptcy, you get to take back control of your financial life. Make today the day you take the initial step towards finally living the life you always dream of. Contact one of our CO bankruptcy lawyers for a cost-free and no obligation case evaluation. We will answer your questions and help you determine whether you qualify for bankruptcy.
Over the years, our experienced Lakewood bankruptcy attorneys have been asked many questions related to bankruptcy and wage garnishments. Some of those questions have been routine, others, much more complex.
Several questions are asked by almost every client who wants to file bankruptcy for relief from wage garnishments. These “frequently asked questions” are usually based on wrong information the client has heard from a friend of a friend, or on a television show. In order to clear up some of the confusion about wage garnishments and bankruptcy, our Lakewood debt relief lawyers have answered a few of the most commonly asked questions about wage garnishment and bankruptcy in Jefferson County.
The way our Lakewood bankruptcy attorneys see it, there are four actions you can take when your property has been repossessed in Jefferson County:
What is wage garnishment?
Our Lakewood bankruptcy attorneys know that you work hard for your wages. But the money you earn from your job can be taken away if you owe unpaid debts. In Colorado, certain creditors can garnish your wages, forcing your employer to take a big chunk of your paycheck and put it directly into the hands of those creditors.
The first step your creditor must take in order to garnish your paycheck is they have to sue you for repayment. Then the creditor obtains a judgment from the lawsuit, and if they win, the court will issue a writ of continuing garnishment. Some debts do not require a legal order to have your wages garnished. The exceptions to the writ of continuing garnishment are
The legally enforceable writ of continuing garnishment is then sent to your employer, who is forced to deduct a percentage of your paycheck which is then sent to your creditor to pay down whatever debt you owe. The creditor will continue to garnish your earnings until you pay off the amount or take action to halt the garnishment, such as filing for Chapter 7 or Chapter 13 bankruptcy.
How much can Colorado garnish my paychecks for?
In Colorado, your paycheck can be garnished up to 25% of your income after taxes and social security, or the amount by which your disposable earnings for a week exceed 30 times the state minimum wage. It’s worth noting that these figures do change depending on what type of debts your wages are being garnished for.
For example, the US Department of Education can only deduct up to 15% of your paycheck for student loan debt repayment. To go over the various amounts of deductions allowed through wage garnishment in Colorado, please contact our experienced Lakewood bankruptcy attorneys.
Can creditors garnish my tax refund in Colorado?
If you’re a Jefferson County resident whose paycheck is already being garnished for unpaid debt and you count on your yearly tax refund to help you get caught up on bills, you may be worried that you’ll lose your refund to garnishment.
Our Lakewood bankruptcy attorneys are here to mostly quell those fears. Federal law allows only state and federal government agencies (not individual or private creditors) to take your federal income tax refund as payment toward a debt.
How can bankruptcy help with wage garnishment?
If you can’t work out a reasonable payment plan with the creditor or can’t afford to make payments at all, you may be able to avoid or stop wage garnishment by filing for Chapter 7 or Chapter 13 bankruptcy in Lakewood.
These two types of bankruptcy are very different, but they have one important thing in common. In most bankruptcy cases, a court order called “the automatic stay” is entered as soon as you file your bankruptcy petition. This order tells creditors and others to stop any collection action against you. If the creditor hasn’t yet gotten a judgment against you, the automatic stay can prevent them from going to court, meaning that no garnishment order is entered, and if your employer is already withholding money to satisfy a writ of garnishment, the automatic stay forces them to stop.
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.
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.
It’s important to note that certain debts cannot be discharged through 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.
The bottom line is that, when dealing with wage garnishments, time is of the essence. If you were already struggling to make ends meet, it’ll become next to impossible not to fall deeper into debt once your paycheck starts being garnished by creditors seeking repayment.
The good news is that filing for bankruptcy in Jefferson County can immediately halt almost all wage garnishments. The longer you wait, however, the more other debt can pile up. This can make it harder to not only keep your head above water but also makes it much harder to file for bankruptcy and get the fresh start you’re looking for.
Contact our Lakewood bankruptcy attorneys today to schedule a free case consultation and end your wage garnishments through bankruptcy.