Can Bankruptcy Stop My Wage Garnishment?
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Filing for bankruptcy can stop wage garnishment right away. For many people, this is the most urgent reason to consider bankruptcy.
Talk to a lawyer before you file. Bankruptcy has many rules. Small mistakes can cost you property or get your case dismissed. A lawyer can help you avoid those mistakes.
Free legal help may be available: Call 866-LEGLAID (866-534-5243) or visit virginialawhelp.org/get-legal-help to find a legal aid office in your area.
You can also search for a bankruptcy lawyer using the National Association of Consumer Advocates (NACA) tool: consumeradvocates.org/findanattorney. Under "area of practice," select "bankruptcy" from the drop-down menu.
This article is a general overview to help you understand the basics of bankruptcy so you feel more prepared when you speak with a lawyer. Every situation is different. Please talk to a lawyer about your specific case.
How does bankruptcy stop garnishment?
Bankruptcy is a legal process where a federal court helps you deal with debt you cannot pay. The moment you file for bankruptcy, something called an "automatic stay" goes into effect immediately.
The stay immediately stops:
- Wage garnishment
- Bank account garnishment
- Foreclosure
- Most collection calls and lawsuits
This happens the same day you file. Your employer must stop taking money from your paycheck as soon as they receive notice.
Can I get back money that was recently taken from my paycheck?
It depends if the garnishment return date has passed yet.
Before the garnishment return date has passed
If a bankruptcy is filed before the return date on the wage garnishment, then usually you can exempt the funds and get them back. A bankruptcy lawyer can guide you through this process.
After the garnishment return date has passed
A prompt filing sometimes means all is not lost. Bankruptcy law has a rule about "preferential transfers." This rule applies when money was paid to one creditor (a person or company you owe money to) shortly before you filed.
If a garnishment took a large amount from you recently, the trustee may be able to recover that money. It would then be shared among all your creditors.
If you just had a large amount taken through garnishment, talk to a bankruptcy lawyer right away. You might be able to recover some of that money. Do not wait.
Can I file to delay a creditor?
A lawyer cannot file bankruptcy just to delay a creditor. If a creditor knows this is the reason, they can ask the court to lift the stay and the court will allow the collection to continue.
Bankruptcy is a serious legal process. It should be used when you genuinely need help with your debts. It is not just a delay tactic.
How long does the stay last?
The stay lasts while your bankruptcy case is ongoing.
In Chapter 7, the case is usually over within a few months. If the debt is discharged, the creditor can no longer garnish you for it.
If the debt cannot be discharged, like child support or some tax debts, the creditor may be able to garnish again after the case ends.
Does bankruptcy also stop bank account garnishment?
Yes. The automatic stay stops bank account garnishment too. If the money was frozen, but the garnishment return date has not yet passed, you may be able to exempt the funds and get them back. But if money has already been paid to a creditor, it will be much harder to recover.
Bankruptcy law has a rule about "preferential transfers." This rule applies when money was paid to one creditor shortly before you filed.
If a garnishment took a large amount from you recently, the trustee may be able to recover that money. It would then be shared among all your creditors.
If you just had a large amount taken through garnishment, talk to a bankruptcy lawyer right away. You might be able to recover some of that money. Do not wait.
For more about bank account garnishment, read: Bank Account Garnishment in Virginia.
Does bankruptcy also stop an offset of my federal benefits for a federal benefit overpayment?
Yes, as long as your overpayment was not the result of you committing fraud.
Should I talk to a bankruptcy lawyer?
Yes. If garnishment is causing serious financial hardship, talking to a bankruptcy lawyer will help you understand your options.
Free legal help may be available: Call 866-LEGLAID (866-534-5243) or visit virginialawhelp.org/get-legal-help to find a legal aid office in your area.
You can also search for a bankruptcy lawyer using the National Association of Consumer Advocates (NACA) tool: consumeradvocates.org/findanattorney. Under "area of practice," select "bankruptcy" from the drop-down menu.
Remember: Once money is paid to a creditor through garnishment, you generally cannot get it back outside of bankruptcy. If you are thinking about bankruptcy, do not wait. Talk to a bankruptcy lawyer immediately.
What should I be aware of when hiring a bankruptcy lawyer?
Be sure to ask about all costs before you hire anyone. In Virginia, bankruptcy costs likely include a filing fee, a recording fee, and the lawyer's own fees.
Some lawyers quote only their own fees, without including court costs. Other lawyers quote the full package. The only way to compare prices fairly is to ask each firm for the full cost breakdown. That way you are comparing the same things.
Understanding the full costs is essential to making an informed decision.
For information on how to select a bankruptcy lawyer and how to prepare for your first meeting, see the NCLC’s “Surviving Debt” guide.