Can my wages be garnished if I file for bankruptcy?
It is devastating to a family when a wage garnishment is taking money out of your household unexpectedly. Creditors can garnish up to 25% of your income! As soon as your bankruptcy is filed, the wage garnishment must stop immediately and your debts can be discharged. This is referred to as an “automatic stay”. Creditors will no longer be allowed to garnish your wages for credit card debt, medical bill debt, or deficiency judgments. Minnesota Bankruptcy Wage Garnishment is a real thing and should be taken seriously.
Credit card companies may garnish (take) your wages just like most other creditors. However, in order to take part of your paycheck, the credit card company must first sue you in court and obtain a judgment. There are steps you can take to avoid a wage garnishment if you are delinquent in your credit card payments.
In the State of Minnesota a creditor who obtains a judgment against you may garnish up to 25% of your net income after taxes and Social Security deductions. For people already struggling, a Minnesota bankruptcy wage garnishment is something that can devastate them and drive them further into debt.
Once a judgment has been entered, creditors begin the collections process. In many cases creditors wait and file garnishments at a future time. If you owe debt a garnishment could potentially happen quickly or much later after a judgment is entered against you. Creditors obtain information pursuant to a court order which allows them to ask questions regarding your assets, employment, and bank accounts. If you have a judgment against you, speak with an attorney immediately to make sure your assets are protected and the appropriate paperwork is filed.
The good news is that an IRS wage garnishment can still be lifted if it happens. It requires some work, but if you take action and call our firm you can receive help to be done properly. Among the challenges to getting an IRS wage levy or IRS wage garnishment lifted is having un-filed tax returns. The IRS requires that all taxpayers are in tax compliance with their tax returns before they will consider stopping the IRS wage levy or IRS wage garnishment. All your previous tax returns need to be up to date.
In the event that the IRS wage garnishment already reaches your employer, you should definitely fill out the IRS wage garnishment form that you can request from your employer.
It is unfortunate to receive phone calls from prospective clients who have all their money seized from their bank account after they receive their paycheck and are left with no money to pay their bills let alone to file for bankruptcy. Worst of all, you cannot get that money back once it is garnished. Similarly, if someone’s wages are garnished and they are living paycheck to paycheck they become delinquent on their other bills. For these reasons, it is best to take a proactive approach in dealing with these issues and address them to keep your assets and prevent garnishment.