About Garnishment

• In states that permit garnishment, most creditors can take up to 25 percent of your wages each period to repay your debt. However, states may allow creditors to take up to 60 percent of your wages if you owe back child support or spousal maintenance. Before a creditor can garnish your wages, he must typically file a lawsuit against you after you miss multiple payments.
  
  

Wage Garnishment in Bankruptcy

• When you file for bankruptcy, an automatic stay immediately goes into effect to prevent any further collection action from your creditors. They can no longer call you, send you letters or file lawsuits against you. Because no creditor can get a judgment against you, no creditor can obtain a court order to garnish your wages. If creditors have already obtained judgments, they can't use them to get a garnishment order or perform any other collection action.
  
  

Previous Garnishments

• The automatic stay enacted in bankruptcy also reverses any wage garnishments creditors put in place before you filed for bankruptcy. However, the court may still allow garnishments to repay certain types of loans from pensions, such as job-related pensions or IRAs. The court will also allow lawsuits establishing paternity or child support to continue, and the Internal Revenue Service can still audit you.
  
  

Avoiding the Automatic Stay

• Though bankruptcy typically prevents a creditor from obtaining a garnishment order or continuing to enact an existing order, creditors can ask the court to lift the automatic stay for their specific debts. However, the court won't typically lift the automatic stay unless it isn't serving the court's purpose. Courts enact the automatic stay to prevent creditors from causing undue hardship on the individual filing bankruptcy. If a garnishment already in effect isn't causing hardship, the court may allow it to continue.
  
  

After Bankruptcy

• When the court closes your bankruptcy case, it will discharge most of your remaining debts. However, the court won't discharge some debts, such as back child support, spousal maintenance, student loans and any debt you incurred fraudulently. Creditors can't garnish your wages to repay debts the bankruptcy discharged, even if they already had garnishment orders before you filed. However, because the automatic stay ends after bankruptcy, wage garnishment creditors whose debts weren't discharged can begin garnishing your wages again as soon as the case closes. Any nondischarged creditor who didn't have a garnishment order before you filed may also be able to garnish your wages after the case closes by obtaining a judgment against you for the debt.