- Filing for bankruptcy protection will stop collection of judgments, foreclosure actions and garnishments. If you filed for Chapter 13 protection, the garnishment would become another creditor paid in installments, according to the Chapter 13 approved payment schedule. If you filed for Chapter 7 protection, the garnishment discharges with the bankruptcy. An exception would be a non-dischargeable debt, such as child support or the Internal Revenue Service. In that event, the garnishment would continue as soon as the Chapter 7 bankruptcy discharges. Bankruptcy is a last resort. If you have financial problems, contact your creditors and try to work out an agreement that you will be able to honor. A creditor rarely takes legal action unless he feels he has no other recourse. A bankruptcy will remain on your credit report for 10 years.
- A garnishment is an attachment of your wages and usually requires a court order. The Internal Revenue Service and state and local government agencies do not need a court order, but face other requirements before they can garnish your wages. Garnishments are limited to 25 percent of your take-home pay, with the exception of child support and alimony, which are limited to 50 percent.
- If your financial situation doesn't allow you to catch up and pay your obligations, look at alternatives. Consider getting a second job. Several hours a week working even for minimum wage may give you enough additional income to catch up on your obligations. You should also consider trading down your vehicle if you have a large payment.
- Your employer cannot legally terminate your employment the first time a creditor garnishes your wages. However, you do not have any legal protection if it happens a second time. If a creditor receives a judgment against you and you cannot pay, contact your creditor immediately and explain your situation or file for bankruptcy protection. Do not wait until your employer receives a garnishment order against you.
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