If you owe a debt that you cannot pay in Louisiana, and the creditor takes you to court to get a judgment against you, then the court can order you to pay the debt. If you do not pay it voluntarily, then the creditor may go back to the court and request the right to garnish your wages.
Unfortunately, wage garnishment is fairly common in the United States, with implications that can be far-reaching, both financially and emotionally. The sheer stress of wage garnishment can plague you at home and in your workplace. According to the U.S. Wage Garnishment Landscape, up to 7 percent of the current workforce has their wages garnished, with about half of that due to unpaid child support. Gen X-ers have the highest garnishment rate, at between 10 and 11 percent. The Midwest leads all U.S. regions in the highest number of employees whose paychecks are being garnished.
While the stereotype is that of low-paid workers having their paychecks garnished, even well-paid workers can be subject to wage garnishment. Debt has begun to significantly affect virtually every level of the American workforce. Wage garnishment can also affect employers; an employer can become liable to the creditor for the full amount of a wage garnishment if it fails to comply with the order to garnish an employee’s wages.
Facing wage garnishment can be a stressful and overwhelming experience. If you’re dealing with this situation, you’re not alone; solutions are available. At Simon Fitzgerald LLC, we specialize in helping individuals navigate these challenging financial circumstances. Our experienced Louisiana bankruptcy attorneys can guide you through filing for bankruptcy, a legal tool that can stop wage garnishment and provide you with the financial relief you need.
What is Wage Garnishment?
Wage garnishment is a legal process where your employer withholds a portion of your earnings to pay off your debts. This can occur when you default on your debt, and your creditor obtains a court order. While it’s a standard debt collection method, it can significantly impact your financial stability and make it challenging to meet your basic living expenses.
However, filing for bankruptcy can provide an immediate stop to wage garnishment. This is due to an injunction known as the automatic stay, which comes into effect as soon as you file for bankruptcy. The automatic stay prohibits most creditors from continuing collection activities, including wage garnishment.
Wage garnishment can be used to collect:
- Unpaid taxes
- Child support
- a loan default
- Credit card bills
- Student loan debt
- Other debts
Disability benefits and Social Security benefits are exempt from garnishment, and a court order is necessary before your wages can be garnished. The only time your wages can be garnished without the benefit of a court order is when you owe money to the federal government, like the IRS. In This is a serious matter because the creditor can get an order to take a large chunk of your income. In the state of Louisiana, your paycheck cannot be garnished more than 25 percent of your disposable earnings, or the amount by which your disposable earnings exceed 30 times the federal minimum wage, whichever is less.
How Can Bankruptcy Stop Wage Garnishments?
Bankruptcy immediately triggers a legal protection known as the automatic stay, which serves as a court order that halts most collection actions, including wage garnishment. This gives you immediate relief from wage deductions and protects your income while you resolve your financial situation.
The automatic stay provides several key benefits:
- Immediate Halt to Garnishment: Once you file for bankruptcy, your employer must stop garnishing your wages. This allows you to keep your full paycheck and regain control over your finances.
- Protection From New Garnishments: Not only are existing garnishments stopped, but creditors are also prevented from starting new garnishments or other collection actions during the stay. This includes unsecured debts like credit cards, personal loans, and medical bills.
- Enforceable Court Order: If a creditor continues garnishment despite the automatic stay, they may face penalties for violating federal bankruptcy law.
- Breathing Room: With garnishment paused, you have time to assess your situation, explore your bankruptcy options, and work with your attorney to develop a long-term plan.
That said, there are exceptions. For example, child support and alimony garnishments may continue even during bankruptcy. Additionally, if you’ve had multiple bankruptcies dismissed within a year, the automatic stay may be limited or not go into effect without a court’s approval.
How Does Chapter 7 Bankruptcy Impact Wage Garnishment?
Chapter 7, often referred to as “liquidation bankruptcy,” allows for the discharge of certain unsecured debts, including credit card debt, medical bills, and personal loans. If your wages are garnished to repay these debts, filing for Chapter 7 bankruptcy can stop the garnishment immediately and potentially erase the debts. The automatic stay used in a Chapter 7 bankruptcy stops creditors from pursuing collection activities and this includes wage garnishment. Following are how Chapter 7 and Chapter 13 bankruptcy can potentially be used to halt wage garnishment. There are, however, certain exceptions. Creditors may request that the bankruptcy court lift the automatic stay, which will only happen if:
- Your creditor settled debts with collateral, like a car or house, or
- The creditor can show they will lose a significant amount of money if they are forced to wait until the end of the case under the automatic stay.
When you file for Chapter 7 bankruptcy, a list of all your creditors must be submitted. Once you submit that list, each of those creditors will be sent a notice from the bankruptcy court that orders them to stop all wage garnishment and other collection activities. If you received a rejection of a Chapter 7 bankruptcy filing within a year of your present filing, the automatic stay is not nearly as long—only 30 days. Your attorney can, however, request an extension of the automatic stay on your behalf.
No automatic stay will be put into place to stop wage garnishment if this is your third filing within the past year. Your attorney can ask the bankruptcy court to put a stay into place and enforce that stay, but it is not automatic. The rationale behind this is that debtors are not allowed to utilize “serial bankruptcy” filings as a method of indefinitely preventing wage garnishment.
When your Chapter 7 bankruptcy ends, the automatic stay will also end. Hopefully, any debts that were subject to wage garnishment will have been discharged as a result of your bankruptcy. If this is the case, your employer is not legally allowed to continue garnishing your wages. If, however, your bankruptcy petition was rejected or dismissed before it was discharged—or certain debts remained after the bankruptcy—the creditor is allowed to continue wage garnishment.
How Does Chapter 13 Bankruptcy Impact Wage Garnishment?
Chapter 13 bankruptcy, known as “reorganization bankruptcy,” involves creating a court-approved repayment plan to repay your debts over three to five years. While wage garnishment for unsecured debts will stop, wage garnishment for domestic support obligations like child support or alimony will continue. When you file for Chapter 13 bankruptcy, the automatic stay goes into effect immediately, shielding your wages from most garnishments and providing much-needed financial relief. This legal protection forces creditors to halt all wage garnishment attempts, allowing you to redirect your income toward essential expenses and meet the terms of your repayment plan.
Chapter 13 serves as a powerful tool for managing debts and stopping wage garnishment in Louisiana. It offers the opportunity to consolidate your debts into a single structured repayment plan based on your financial capabilities. Our skilled bankruptcy attorneys will work closely with you to develop a personalized plan that considers your income, expenses, and the specific debts you owe. This tailored approach allows you to make affordable monthly payments over time, helping you gradually repay what you owe while protecting your wages from most garnishment efforts.
The court could, however, potentially order that your repayment plan be fulfilled through wage deductions—but this is different from a creditor-initiated wage garnishment and is done under the supervision of the court to support your repayment plan.
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You may be able to recover some of the wages garnished before your bankruptcy filing, especially if they were taken within the 90 days leading up to your filing date. Under Chapter 7, if $600 or more was garnished during this period and you have exemptions available, the trustee may be able to recover that money for you.
In Chapter 13, while direct recovery is less common, your repayment plan could credit you for previously garnished wages—especially if the plan repays creditors more than they would have received through garnishment.
Keep in mind, this process can be complex, and recovery is not guaranteed. It’s important to work with an experienced bankruptcy attorney who understands how to navigate these situations.
What steps should I take if my wages continue to be garnished after filing for bankruptcy in Louisiana?
If you discover that your wages continue to be garnished after filing for bankruptcy in Louisiana, it’s essential to take immediate action to address the situation:
- Notify Your Bankruptcy Attorney: Inform your bankruptcy attorney promptly about the ongoing wage garnishment. They will investigate the matter, review the details of your case, and take appropriate steps to ensure the automatic stay is properly enforced. Your attorney will advocate for your rights and work to stop the garnishment.
- Provide Documentation: Gather and provide any relevant documentation related to your bankruptcy filing and the ongoing garnishment to your attorney. This documentation may include proof of your bankruptcy petition, notices sent to your employer, and evidence of the continuing garnishment. The documentation will help strengthen your case and facilitate a swift resolution.
- Contact Your Employer: Reach out to your employer and inform them about the ongoing wage garnishment despite your bankruptcy filing. Provide them with the necessary documentation from your attorney to clarify the situation and ensure they are aware of the automatic stay. Request that they immediately halt the wage garnishment deductions from your paycheck.
- Seek Legal Intervention, if Necessary: If the wage garnishment persists despite your efforts to resolve the issue, your bankruptcy attorney may need to take legal action. They may file a motion with the bankruptcy court to enforce the automatic stay and seek appropriate remedies. This legal intervention will bring the matter to the court’s attention and prompt necessary action to stop the garnishment.
Remember, communication with your bankruptcy attorney is crucial throughout this process. They will serve as your advocate, working to protect your rights, stop the garnishment, and ensure that you receive the full benefits of the automatic stay provided by the bankruptcy laws.
Meet Olivia and Ethan: Stopping Wage Garnishment – A Success Story
Olivia and Ethan, a young couple in Shreveport, were facing a financial crisis. Both had lost their jobs during an economic downturn and struggled to keep up with their mounting debts. Credit card bills, medical expenses, and personal loans were piling up, and their creditors were becoming increasingly aggressive.
The situation became worse when one of their creditors obtained a court order for wage garnishment. Ethan had recently found a new job, but now a significant portion of his income was being withheld to pay off their debts. The couple barely made ends meet, and the wage garnishment pushed them to financial ruin.
Desperate for a solution, Olivia and Ethan turned to Simon Fitzgerald LLC for help. Our experienced bankruptcy attorneys quickly assessed their situation and determined that filing for Chapter 7 bankruptcy would be the best course of action. By doing so, an automatic stay was enacted, halting the wage garnishment and providing the couple with much-needed relief.
Our team guided Olivia and Ethan through bankruptcy, ensuring they understood their rights and options. We worked diligently to discharge their unsecured debts, including those that had led to the wage garnishment. The couple was able to eliminate their burdensome debts and regain control over their financial lives.
Today, Olivia and Ethan are on the path to financial stability, free from wage garnishment stress and anxiety. They are grateful for the compassionate and practical legal guidance they received from Simon Fitzgerald LLC and are optimistic about their financial future.
If you, too, are facing wage garnishment and need assistance, don’t hesitate to contact our dedicated team of bankruptcy attorneys. We’re here to help you navigate this challenging time and provide the tools and support you need to achieve financial freedom.
Wage Garnishment Resources and Additional Information
- What are the alternatives to bankruptcy for stopping wage garnishment in Louisiana?
- U.S. Department of Labor on Federal Wage Garnishments
- Consumer Financial Protection Bureau
- Facts About Wage Garnishments
- What are the rules for wage garnishment during bankruptcy?
Why Choose Simon Fitzgerald LLC to Overcome Wage Garnishment?
When overcoming wage garnishment, you need a team that combines experience, compassion, and commitment. At Simon Fitzgerald LLC, we’ve built a legacy of helping clients regain control of their finances. Our team of experienced bankruptcy attorneys is committed to providing you with the guidance and support you need to overcome wage garnishment. We’ll work closely with you to understand your financial situation, explore your options, and determine the best course of action.
Filing for bankruptcy can be the best way for you to achieve debt relief if you are struggling with overwhelming debt. There are alternatives to bankruptcy, but these alternatives are not always as successful as bankruptcy in providing total debt relief. You should always weigh the pros and cons, after speaking to a knowledgeable wage garnishment bankruptcy attorney from Simon Fitzgerald.
With our legacy as a foundation, you can trust that we will assist you in resolving your financial issues. Ready to take control of your finances? Are you feeling overwhelmed by your financial situation? Our easy-to-understand e-book can help you understand more about bankruptcy. When you’re ready, you can check your eligibility for bankruptcy right here. Our bankruptcy experts are always here to help if you have any specific questions. Click here to schedule your free consultation today.
