The unique set of circumstances that might lead you to file for debt relief using the bankruptcy courts can vary a great deal, but almost all cases are spurred on by the punitive actions of creditors. If you owe money to a credit card company, for taxes, or to your mortgage lender, the efforts to collect what's owed can be more than just a bit annoying; in some cases those efforts make it difficult to avoid worsening your already-bad situation. Read on to learn more about a certain type of collection action: wage garnishments.
When it comes to some forms of debt, you might end up actually losing your property if you fail to pay as agreed. A mortgage is based on the ownership of your home, and if you get far enough behind you may find yourself in foreclosure proceedings and fighting to keep a roof over your head. If you don't pay your car payments, that vehicle might disappear from your driveway when it gets repossessed by the lender. Those debts are all secured debts, which means that property is at risk when you fail to pay. There is another type of debt known as unsecured, and that means an entirely different set of collection attempts.
Unsecured debts include credit card and sometimes personal or signature loans. It may also include medical debts, tax debts, court judgment debts, and child support debts. There is no property at risk with this type of debt, but that doesn't mean the creditor can't try to collect.
When you are late on your bills, you may have to put up with constant phone calls and letters. Eventually, those creditors may exert a court judgment on you that forces you to pay. To assure payment, you may be saddled with a wage garnishment. This means that the creditor gets first dibs when you get paid; the money is removed before it comes to you and is provided to the creditor instead.
Stopping Wage Garnishment
Without a bankruptcy filing, you will have to satisfy the debt in full, including any penalties, fees, and interest. Once you file for bankruptcy, however, the creditor must suspend all wage garnishment activities. This serves several purposes:
1. It gives you more take-home pay.
2. It eliminates the debt that triggered the garnishment in the first place.
Not all Garnishments are Equal
There are few things to know about the automatic stay that does away with wage garnishments. If you owe money for any of the following, the wage garnishment will stay in place:
1. Child support back payments
2. Back taxes (no new garnishments or liens can be placed once you file)
3. Money owed to the courts for fines and fees. For example, if you owe court costs in addition to the judgment for a creditor legal action, you must still pay those costs.
To learn more about wage garnishment, speak to a bankruptcy attorney.