Florida law allows certain creditors to garnish the wages of debtors who have fallen behind on their payments or are not actively paying down debt. Garnishment can take 25% or more from your paycheck after taxes. However, if you file for bankruptcy, most creditors will immediately be prohibited from garnishing your wages. This includes most commercial debt, including credit card debt, medical bills, and utilities payments.
Filing for bankruptcy may be a valid option if you face insurmountable debt. But bankruptcy is not a step to be taken lightly. It stays on your credit for 7 to 10 years but may look better on the credit report than the judgments and debts eliminated through the bankruptcy. The Tampa wage garnishment attorneys of Florida Law Advisers, P.A., can review your financial situation and discuss whether a bankruptcy filing is appropriate in your case. Our goal is to make the process as stress-free as possible.
Contact us today for a free consultation with an experienced Tampa wage garnishment lawyer.
Types of Bankruptcy You Can File
If filing for bankruptcy as an individual, you have two approaches:
- Chapter 7 bankruptcy, This is called liquidation bankruptcy, but much or all of your personal and real property may be protected, depending on your assets.
- Chapter 13 bankruptcy, in which you develop a repayment plan to pay off your debts in installments over three to five years. A Chapter 13 bankruptcy is also known as a “wage earner’s plan” and may be appropriate if you have regular income.
Either type of individual bankruptcy will allow you to discharge a variety of unsecured debts and protect you from bill collectors and creditors. With rare exceptions, it includes an automatic stay-to-end to all collections and foreclosure actions, including wage garnishments on most debts.
Wage garnishments will not necessarily end for what you owe for:
- Student loans
- Federal, state or local taxes
- Alimony or child support.
Requirements for Filing Bankruptcy To Stop Wage Garnishment
Individuals preparing to file for Chapter 7 bankruptcy must, among other qualifications, prove their income makes them eligible for Chapter 7 bankruptcy protection. There are two ways to qualify for the income test:
- If your average income over the most recent six months is less than the state median income for a household of the same size as yours, you can proceed with a Chapter 7 filing.
- If you do not qualify under the first test, you must show that your income less allowed deductions satisfies the legal requirement. This requires completing:
- Chapter 7 Statement of Your Current Monthly Income. The U.S. Bankruptcy Court advises in its introduction to the 50 pages of forms and instructions, “You are strongly encouraged to hire a qualified attorney to help you complete the forms and give you general advice about bankruptcy and to represent you in your bankruptcy case.”
- Chapter 7 Means Test Calculation. Your completed copy of Chapter 7 Statement of Your Current Monthly Income is used for the means test, a nine-page form that resembles a tax return.
You must complete a credit counseling briefing from an approved debtor agency within 180 days of filing your bankruptcy petition. You must also take an approved course about personal financial management and file the certificate of completion with the court before any of your debts will be discharged.
To file for Chapter 13 bankruptcy, an individual must meet requirements, including:
- Combined total secured and unsecured debts of less than $2.75 million as of the date of filing for bankruptcy relief.
- Within 180 days of filing, received credit counseling from an approved credit counseling agency either as an individual or in a class.
- Not had a bankruptcy petition dismissed during the preceding 180 days due to the debtor’s failure to appear before the court or comply with court orders or have taken a voluntary dismissal after creditors sought to recover property upon which they hold liens.
As part of your petition to the bankruptcy court, you must submit a plan to pay a portion of your debts over the next 3-5 years. Your creditors will have the opportunity to object to the plan and request changes.
Pros and Cons of Filing for Bankruptcy to Stop Wage Garnishment
There is good reason to pursue bankruptcy if you qualify: As soon as you file for bankruptcy, a bankruptcy automatic stay goes into effect, which prevents creditors from continuing to collect on most debts, including certain wage garnishments.
Bankruptcy eliminates debt through discharges. However, certain debts are non-dischargeable debts, such as child support and taxes. In the end, bankruptcy can give you a fresh start without the burden of overwhelming debt.
But having bankruptcy on your credit report may make it hard to get personal loans for several years:
- Chapter 7 Bankruptcy can stay on your credit report for up to 10 years.
- Chapter 13 Bankruptcy can stay on your credit report for up to 7 years.
Filing fees and attorney’s fees for a bankruptcy filing can be expensive.
Contact Our Wage Garnishment Lawyers in Tampa, FL
For many people, it is the relief they feel after a bankruptcy filing that is the biggest positive about taking this step to make a fresh financial start. If your wages are being garnished or you are dealing with debt you cannot handle in Florida, talk to one of our wage garnishment attorneys about finding a way out for you.
Florida Law Advisers, P.A., can help you seek bankruptcy protection if that is what is best for you or explore alternatives to bankruptcy.
Contact a wage garnishment lawyer today at (844) 698-3765 or online for a free and confidential consultation with an experienced Tampa wage garnishment lawyer.
