Wage garnishment can place a heavy financial burden on individuals struggling to make ends meet. If you live in California and are facing wage garnishment, filing for bankruptcy might be a viable solution to stop it. Here’s how bankruptcy works to halt wage garnishment and what you need to know about the process.
What Is Wage Garnishment?
Wage garnishment is a legal process where creditors deduct a portion of your paycheck to settle unpaid debts. In California, common reasons for wage garnishment include unpaid credit card bills, personal loans, child support, taxes, and court judgments.
California law limits wage garnishment to 25% of your disposable income or the amount exceeding 40 times the state minimum hourly wage, whichever is less. However, this deduction can severely impact your financial stability.
How Does Bankruptcy Stop Wage Garnishment?
Filing for bankruptcy in California triggers an automatic stay, a powerful legal protection that immediately halts most collection actions, including wage garnishment. The automatic stay stops creditors from garnishing your wages, harassing you with collection calls, or initiating lawsuits.
Chapter 7 Bankruptcy
- Immediate Relief: Chapter 7 discharges unsecured debts like credit card bills, medical debt, and personal loans, often eliminating the basis for garnishment.
- Timeline: Most cases are resolved within 4–6 months.
- Eligibility: You must pass the means test, proving your income falls below California’s median income level.
Chapter 13 Bankruptcy
- Structured Repayment: Chapter 13 reorganizes your debts into an affordable 3–5 year repayment plan.
- Protects Assets: Ideal for individuals who want to keep significant assets while stopping garnishment.
- Repayment Adjustment: Certain garnishment amounts may be reduced under your plan.
Steps to Stop Wage Garnishment with Bankruptcy
- Consult a Bankruptcy Attorney
Seek professional advice to understand your options and determine whether Chapter 7 or Chapter 13 is the best fit for your financial situation. - File for Bankruptcy
- Filing triggers the automatic stay, effectively stopping wage garnishment.
- Notify your employer and creditors about the bankruptcy filing to ensure compliance.
- Attend the Creditors’ Meeting
After filing, you’ll attend a 341 meeting where creditors can question your financial situation. This step finalizes the protection from garnishment. - Discharge or Repayment Completion
- In Chapter 7, debts linked to garnishment are typically discharged.
- In Chapter 13, creditors must adhere to the repayment plan approved by the court.
Exceptions to the Automatic Stay
The automatic stay does not stop all garnishments. For example:
- Child Support and Alimony: Garnishments for these obligations continue even after filing for bankruptcy.
- Tax Liens: The IRS may have some collection rights despite the stay.
Real-Life Example
Consider Maria, a California resident, whose wages were being garnished due to unpaid medical bills. After consulting a bankruptcy lawyer, she filed for Chapter 7 bankruptcy. The automatic stay immediately stopped the garnishment, and within five months, her medical debt was discharged. This allowed her to regain financial stability.
Frequently Asked Questions
1. Can I recover garnished wages after filing for bankruptcy?
Yes, in some cases, wages garnished 90 days before the bankruptcy filing may be recovered if they exceed $600 and meet certain conditions.
2. How long does it take to stop garnishment after filing for bankruptcy?
The garnishment typically stops as soon as creditors and your employer are notified of the bankruptcy filing.
3. Will filing for bankruptcy affect my job?
Your employer cannot legally terminate or discriminate against you for filing bankruptcy.
Let’s Summarize
Filing for bankruptcy in California provides a legal and effective way to stop wage garnishment. Whether you choose Chapter 7 for immediate debt relief or Chapter 13 for a structured repayment plan, bankruptcy can help you regain financial freedom. Consult a qualified attorney to explore your options and protect your income.