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Bankruptcy and Wage Garnishment

Posted By admin || 15-Jun-2012

Bankruptcy and Wage GarnishmentWage garnishment is an action pursued by creditors to help satisfy outstanding debt. The action allows them to take paycheck earnings and have them automatically forwarded to creditors. Bankruptcy may stop the garnishing process and even collect wages that have been garnished under certain circumstances.

When bankruptcy is filed the automatic stay goes into effect which stops creditors from pursuing ongoing collection attempts against the debtor. This action can stop wage garnishment but a creditor may seek permission from the court to continue garnishing if their reason is valid.

If your wages are being garnished for back child or spousal support, the automatic stay may not apply since such debts are considered a priority to the court (priority debt). In most cases, after your bankruptcy is completed creditors can no longer continue garnishing your wages. The stay that is in effect may run until you obtain a discharge from debts.  If your case gets dismissed before obtaining a discharge or the court grants to remove the stay, the creditor could continue to garnish wages.

If you qualify you may be able to regain funds that were garnished but only under specific conditions. There are situations in which a creditor takes more than they are obligated to and state law may only allow a certain portion of wages to be garnished. You can file a complaint with the court if you meet requirements. Keep in mind, when bankruptcy is filed you may need to notify the payroll department of your place of employment if the garnishment doesn't stop immediately.

http://www.nolo.com

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