How To Prevent Your Wages From Garnishment
Wage garnishment is a threatening idea, especially if you are in debt and have the IRS or collectors breathing down your neck
. If you are already subject to wage garnishment due to unpaid debts or IRS taxes, the time to take action is now. Each week, your income is being seized by creditors, making it harder for you to pay for utilities and other necessities, and driving you further into debt.
Wage Garnishment Causes Downward Spiral
The vicious cycle that is triggered by wage garnishment can come to an end, and bankruptcy may be one way to find financial freedom. How does bankruptcy work? In a Chapter 7 bankruptcy, the court will look at a filer's debts, assets and income, and then grant a discharge of all eligible unsecured debts.
Debts: Chapter 7 bankruptcy is designed to stop wage garnishment, eliminate credit card debt, medical bills, payday loans and other debts not secured by physical property. Even certain tax debts can be discharged, though specific requirements must be met in order for them to be eligible for discharge.
Assets: Chapter 7 bankruptcy works by selling a filer's assets, but state laws provide protections for many categories of property, often including a home and vehicle. Many filers do not have to sell any assets.
Income: In order to file Chapter 7 bankruptcy, you must qualify under the means test, which compares your household income (before wage garnishment) to the median in your state for a similar household size. Many people who turn to Chapter 7 bankruptcy pass the means test and are allowed to file. Alternatively, in a Chapter 13 bankruptcy, you create a debt repayment plan that allows you to catch up on financial obligations over a three to five year period.
Protection From Bill Collectors
Bankruptcy laws put you on an even playing field with your creditors. The moment that your case is filed with the bankruptcy court, a special court order halts all wage garnishments and any other collection efforts against you. Typically, this order lasts throughout the bankruptcy case and allows you to focus on the bankruptcy case.
Debts Not Protected By Bankruptcy
Not all debts that can lead to wage garnishment are allowed to be eliminated in bankruptcy. Debts that are non dischargeable include:
Federally guaranteed student loans
Child support and spousal support obligations
Criminal fines
Recent tax debts
Debts incurred through fraud
Even still, bankruptcy may be an option if you have these debts along with common consumer debts, as it may allow you to reshape your finances into a more manageable picture. Eliminating credit card debt can make it easier to make regular payments to these other obligations. Wage garnishment can be stopped, and bankruptcy could help you get your life back on track.
by: Nathan Randall
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