A Chapter 7 or Chapter 13 bankruptcy can stop most garnishments. In most cases, to begin garnishing your wages a creditor must first file a lawsuit against you, serve you, and get a judgment. With that judgment, the creditor may request that the local sheriff’s office send a demand to your employer to garnish your wages. A judgment creditor in Idaho may garnish up to 25% of your gross wages. Gross wages are those you receive before taxes. Therefore, if you earn $2,000 per paycheck you can expect a deduction of $500 from each paycheck.
Retaining a bankruptcy attorney can often act as a deterrent to a creditor taking the time and effort to start a garnishment. However, hiring an attorney on its own will not prevent a garnishment from starting or continuing. Filing the bankruptcy case is what actually mandates that the garnishment stop.
Filing a bankruptcy case imposes an “automatic stay.” This stay halts a garnishment that has already started. On the day of filing, your attorney will reach out directly to the sheriff’s office that is enforcing the garnishment, and we can get the garnishment halted nearly immediately.
- Chapter 7 Bankruptcy
This stays in place throughout the Chapter 7 bankruptcy case. Absent complications, a debtor receives their discharge approximately four months after their bankruptcy filing. So long as that discharge applies to the debt associated with the garnishment, then the garnishment will be permanently halted.
- Chapter 13 Bankruptcy
In a chapter 13 bankruptcy, the garnishment halts for the duration of the case until the debtor receives a discharge at the end of the chapter 13 plan. Typically, this is a three-to-five-year plan. However, if the case is dismissed without discharge for any reason, then the garnishment can begin again. Having a competent attorney to get you through the entirety of the chapter 13 plan is imperative to the success of the plan, and thus to preventing further garnishment.
While a garnishment is when a judgment creditor is able to seize a portion of a judgment debtor’s paycheck; a levy is when a judgment creditor is able to seize a portion of the funds in a judgment debtor’s bank account. A bankruptcy case cannot undo a levy that occurred prior to filing, but it can halt a levy that is scheduled to occur after the bankruptcy filing.
Any funds that are levied or garnished unintentionally after the bankruptcy case is filed can often be retrieved as the post-petition levy or garnishment is a violation of the bankruptcy stay.
At Kootenai Bankruptcy, our experienced attorney will be able to walk you through your options, and take the best steps to stop your garnishment. Call or text us today and we can discuss your options.