How to Stop Creditors From Garnishing Your Paycheck
Wage garnishments can be devastating to many people struggling to keep up with their debts. When someone stops making a payment obligation, it’s usually because they can’t afford to make the payment in the first place. Deductions of up to 25% of a person’s paycheck for one particular debt can cause most people unrecoverable debt problems.
In most circumstances, a creditor will need to seek a court judgment to deduct your wages. With some types debt obligations though, creditors only need to provide a written 30 day notice to the borrower of their intent to garnish. Some of these types of obligations include federally guaranteed student loans and child support payments.
The Bad News About Educational Garnishments
Many Americans are struggling today to pay their student loans. If fact, according to the Federal Reserve Bank of St. Louis, 31.5% of American student loans borrowers are at least a month behind in their payments. This number is even greater when you deduct students who are currently attending school with a student loan. With this particular demographics, the total number of borrowers who are late on a least one payment is closer to 45%.
Unfortunately, student loans guaranteed by the federal government do not need a court’s intervention to garnish an individual’s wages. Additionally, these types of loans are no longer eligible for debt elimination in a Chapter 7 Bankruptcy. You may be eligible though to have more manageable debt payments in a Chapter 13 filing.
Using Bankruptcy to Stop Wage Garnishments
Once a bankruptcy case is filed, the automatic stay immediately terminates most collection actions, including wage garnishments. If your wages continue to be garnished after your bankruptcy case is filed, you are automatically entitled to recover those wages. If it can be proven that your wages continued to be garnished even though the creditor was aware of your bankruptcy filing, you may be able to sue the creditor for willful violation of the automatic stay.
Additionally, you may be entitled to recover some wages that were garnished before your bankruptcy case was filed. If the amount exceeds $600 in the 90 days prior to filing your bankruptcy case, the trustee has a right to recover those funds and distribute them evenly amongst all of your unsecured creditors. If, however, the trustee abandons his interest in those funds, the right of recovery switches over to you.
To find out if you are eligible for bankruptcy relief in Utah or if you have any questions about the services we provide, contact us by Phone at (801) 432-8682 or email at firstname.lastname@example.org
We can stop wage garnishment and creditor harassment. Contact us for a free consultation!