Can Bankruptcy Stop Wage Garnishments?

October 31, 2015

As long as a garnishment hasn’t gone into effect, yes, filing for bankruptcy can stop it, a Denver bankruptcy attorney explains. Here’s why.

As long as a garnishment hasn’t gone into effect, yes, filing for bankruptcy can stop it, a Denver bankruptcy attorney explains. Here’s why.

Whether or not bankruptcy can stop wage garnishments will depend on whether the garnishment has already gone through. Specifically, when people file for bankruptcy, a court injunction known as an automatic stay will immediately go into effect.

The automatic stay will halt creditors from taking any additional action against bankruptcy petitioners – and this includes wage garnishments.

So, if creditors have been threatening to garnish someone’s wages and that person files for bankruptcy before the garnishment takes effect, then YES, bankruptcy can stop wage garnishments. If, however, that individual’s wages are already being garnished, filing for bankruptcy cannot reverse the garnishment.

Background on the Automatic Stay in Bankruptcy

The automatic stay associated with bankruptcy cases is intended to prevent any one creditor from taking someone’s assets when that person has made the move to file for bankruptcy.

Instead, the petitioner’s assets will become part of his bankruptcy estate (excluding the assets protected by Colorado bankruptcy exemptions), which will be used to repay all of the creditors a person has to the extent that is possible (in Chapter 7 bankruptcy cases).

What Else Bankruptcy Can Do Via the Automatic Stay

In addition to stopping wage garnishments from moving forward, the automatic stay in bankruptcy can also stop other actions or processes, including:

  • Foreclosures
  • Repossessions
  • Lawsuits being filed against petitioners.

This makes the automatic stay a powerful feature of bankruptcy – and it means that, when people who are struggling with debt start to get warnings from creditors regarding possible garnishments, foreclosures, repossessions and/or lawsuits, filing for bankruptcy can be their best move.

Ready for More Advice about Your Best Debt Relief Options? Contact Denver Bankruptcy Attorney Jon B. Clarke Today

To get more information about your best options for debt relief and a financial fresh start, contact experienced Denver Bankruptcy Attorney Jon B. Clarke.

For more than 35 years, Mr. Clarke and his diligent support staff have been successfully helping our clients resolve even the most complex bankruptcy cases for individuals and businesses alike. Our experienced legal professionals are committed to providing each of our clients with the personalized debt relief assistance they need, and we will work tirelessly to ensure that our clients’ cases are resolved as favorably and efficiently as possible.

Complete our Business or Consumer Debtor Analysis Form, call our firm at (303) 779-0600 or (866) 916-3950, or email us using the contact form on this page to find out more about how we can help you. From our offices based in Denver, Castle Rock and Greenwood village, we take pride in providing people throughout the state of Colorado with the highest quality debt relief legal services.

Categories: Bankruptcy, Debt Relief, How to Deal with Debt Collectors, Wage Garnishments