How Chapter 7 Bankruptcy Can Be Helpful If Your Wages Are Being Garnished

Filing for Chapter 7 bankruptcy offers a lot of benefits, but one of the key benefits is that it forces all creditors to stop seeking collections from you. This can be very relieving if you are getting phone calls constantly or letters in the mail. You may not realize, too, that filing for Chapter 7 will typically prevent creditors from garnishing your wages too. If you currently have a creditor doing this, here are several important things to know.

Chapter 7 Offers An Automatic Stay

An automatic stay is something that stops creditors from coming after you for the money you owe. Legally, your creditors must follow this rule by not calling you, emailing you, or sending you letters. Creditors must also stop garnishing your wages once the automatic stay is in place. This can offer great relief to you if you are dealing with these things, and this is a huge benefit Chapter 7 offers.

This May Not Apply To All Types Of Garnishments

When you file for Chapter 7, wage garnishments should stop for most debts; however, there is a good chance that the garnishments will not stop if they are for child support. Child support is a debt that you must pay because it is not something Chapter 7 can wipe out. Chapter 7 is great for wiping out other types of debts, though, such as credit card bills or medical bills.

In addition, there might be certain garnishments that stop temporarily during your case but will restart when the case is discharged. Student loans and tax debts often work like this. There are times when these debts can be forgiven in bankruptcy, but there are times when they cannot. If the debts are forgiven, you will never have to worry about having your wages garnished for them. If they are not forgiven, your wages will most likely be garnished after the bankruptcy case is discharged.

The Results If Your Case Is Dismissed

If your bankruptcy case does not receive a discharge, it is most likely because the trustee dismissed the case. Trustees can dismiss cases for a variety of reasons, but this happens primarily when paperwork is not completed properly or when people falsify information. If the trustee dismisses your case, you can expect all the same garnishments to begin again.

There are a lot of good reasons to file for bankruptcy, but it is always important to know how this will affect your finances before you file. To learn more, schedule a visit with a bankruptcy attorney today.