Bankruptcy Stops Wage Garnishments Cold

Bankruptcy Stops Wage Garnishments Cold

One of the most beneficial provisions of the federal Bankruptcy Code is the automatic stay which stops all creditor action once the case is filed. Creditors can no longer commence or continue lawsuits, foreclose or repossess property, make harassing telephone calls, or garnish wages. For Massachusetts residents having their wages garnished, the automatic stay is welcome relief.

When a bankruptcy case is filed, the individual is under the authority and protection of the United States Bankruptcy Court. The automatic stay is just what it sounds like: a cessation of all collection activity immediately upon filing the case. This stay is "automatic" because it does not require a separate motion or a hearing. The stay is effective against any creditor, whether or not there is actual notice.

For wage garnishments, the automatic stay imposes an affirmative obligation for the creditor to put an end to the garnishment immediately. Failure to take this action could result in sanctions by the bankruptcy court. Typically, the debtor's attorney will notify the garnishing creditor of the bankruptcy filing and, in turn, the creditor will release the garnishment through notice to the state court and the debtor's employer. An exception to this general rule is a Massachusetts child support or other domestic support order, which is not affected by the automatic stay.

Money that has been collected and is being held by an employer will be returned to the debtor after the bankruptcy filing. In addition, if a creditor has taken over $600 from a paycheck or bank account within the 90 days before the bankruptcy filing, the bankruptcy trustee or the debtor can recovered the garnished funds from the creditor.

If your wages are being garnished, contact The Law Office of Robert W. Kovacs, JR. at (508) 926-8833 and discuss how a bankruptcy filing can stop the garnishment. Bankruptcy can provide immediate and lasting relief to Worcester and Framingham residents struggling with overwhelming debt. Call today and start down a path to financial recovery.