Filing for bankruptcy can provide much-needed relief from financial struggles, especially when you’re facing wage garnishments. If creditors are taking money directly from your paycheck, it can feel like you’re trapped in a cycle of debt with no way out. The good news is that filing for bankruptcy can stop most creditors from continuing collection actions.
How to ensure a halt to wage garnishments
When you file either Chapter 7 or Chapter 13 bankruptcy in Michigan, an automatic stay is immediately issued by the bankruptcy court. This stay prohibits most creditors from continuing collection activities, including wage garnishment. The automatic stay will remain in effect throughout your bankruptcy case to provide you with financial relief during the process.
Once you file, your employer and the creditor will be notified to cease wage garnishments. This temporary relief gives you breathing room to reorganize your finances without creditor interference. Attending all required meetings and complete necessary documentation will make the bankruptcy process go smoothly and keep wage garnishments paused.
Wage recovery options and exceptions
In certain situations, you may be able to recover wages that were garnished before filing for bankruptcy. If the creditor garnished more than $600 within the 90 days preceding your bankruptcy filing and the funds would have been exempt in the bankruptcy, you might be eligible to reclaim that money.
It’s important to note that the automatic stay does not halt all types of wage garnishments. For example, garnishments related to child support, alimony, certain taxes, and student loans may continue despite a bankruptcy filing. Obligations like these are often considered non-dischargeable and may require separate legal actions to address.
You can work towards regaining financial stability without needing to worry about your financial condition in the present.