Does Bankruptcy Cover Wage Garnishments?
Wage garnishment refers to a court-ordered deduction from an individual's paycheck for an unpaid debt or obligation. Garnishment can cover unpaid credit card debt, taxes, child support, alimony, utility bills or other debts.
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Limits
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No limit exists on the number of wage garnishments filed against an individual. As of 2010, garnishment for most unpaid debts can equal no more than 25 percent of an individual's pay, according to Nolo.com, but up to 50 percent of pay for child support or alimony.
Automatic Stay
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When an individual applies for bankruptcy, the court issues an "automatic stay," which prevents creditors, collection agencies and government agencies from pursuing further collection efforts. The stay includes wage garnishments, as well as lawsuits, foreclosures and evictions. Bankruptcy doesn't end wage garnishment for child support and alimony, although the individual can pursue temporary relief, notes FilingForBankruptcyOnline.com.
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Post-Bankruptcy
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The chapter of bankruptcy filed determines liability for debts after the bankruptcy case's conclusion. Chapter 7 liquidates most debts, and the debtor's liability, while Chapter 13 bankruptcy sets a repayment plan for paying off debts. Under either type of case, the debtor will no longer experience wage garnishments for debts incurred before the bankruptcy, Nolo.com reports.
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References
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