Are you facing a wage garnishment or bank account garnishment? If you’re struggling with these types of collection actions, filing for bankruptcy may offer a much-needed solution. Many consumers file for bankruptcy specifically to stop garnishments, regain control of their finances, and eliminate overwhelming debts. In this post, we’ll explore how bankruptcy can stop garnishments and how much of your wages or bank account can be taken during this process.

Can Bankruptcy Stop a Garnishment?

Yes, bankruptcy can stop garnishments. Once you file for bankruptcy, an automatic legal protection called the automatic stay goes into effect immediately. This halts most types of collection actions, including wage garnishments, bank account levies, and creditor phone calls.

The automatic stay stops creditors from taking further action against you, giving you a temporary respite from their collection efforts. This includes putting an immediate end to wage garnishments and bank account garnishments.

How Much of My Wages or Bank Account Can Be Garnished?

The amount that creditors can garnish depends on the type of debt and your income. Here’s a breakdown of what to expect:

  • Wage Garnishment:
    • Non-Government Debts: In most cases, creditors can garnish up to 25% of your disposable income (the amount you take home after taxes and mandatory deductions).
    • Government Debts: For government debts, such as federal student loans or child support, garnishment can be much higher—up to 60% of your disposable income or more.
  • Bank Account Garnishment:
    • If a creditor obtains a judgment against you, they may also garnish your bank account. This can be as high as 110% of the debt owed, which means you could lose more than the original debt amount.
    • Additional Consequences: Bank account garnishments often result in overdraft fees and missed payments, worsening your financial situation.

How Bankruptcy Stops Garnishments

When you file for bankruptcy, the automatic stay takes effect, putting an immediate halt to most collection actions, including:

  • Wage garnishments
  • Bank account garnishments
  • Court judgments related to debt collection
  • Harassing creditor phone calls

This means that once you file for bankruptcy, creditors can no longer take legal action to garnish your wages or bank account without going through the bankruptcy court.

What Happens After Filing for Bankruptcy?

Filing for bankruptcy gives you significant protection, but it’s important to understand the following:

  1. Wage Garnishment Ceases Immediately: Once your bankruptcy case is filed, the automatic stay stops wage garnishments immediately, giving you back access to your full paycheck.
  2. Bank Account Garnishments Stop: Similarly, any garnishments on your bank account will stop, and you’ll no longer be at risk of losing funds to creditors.
  3. Secured Creditors: If you have secured debts, such as a mortgage or car loan, the creditor may request the bankruptcy court to lift the automatic stay if you’re not making payments. However, as long as you’re making payments, the stay will protect you.
  4. Plan for Future Payments: While bankruptcy stops garnishments, it’s essential to keep up with your future payment obligations to avoid any further garnishments once your bankruptcy case is complete.

Why Bankruptcy May Be Your Best Option

Filing for bankruptcy can be a powerful tool to eliminate debt and protect your assets. Here are just a few reasons why bankruptcy might be the right choice for you:

  • Immediate relief from garnishments.
  • Protection from creditor harassment.
  • The ability to keep your home and car if you continue making payments.
  • A fresh financial start after your debts are discharged.

Next Steps: Stop Garnishment and Reclaim Your Financial Future

If you’re struggling with garnishments and need a way out, bankruptcy could be the solution. Don’t let creditors control your finances any longer. Schedule a free consultation with our Kansas City bankruptcy attorneys today. We’ll help you understand your options and guide you through the bankruptcy process to stop garnishments and start fresh.