How Bankruptcy Protects Your Wages

People have many reasons for not filing for bankruptcy and the majority of them are linked to fear. Fear of friends and family finding out… fear of destroying their credit… fear of losing their homes.

They might even fear that any money they earn after bankruptcy will be taken from them and given to their creditors, leaving them nothing to pay for food or other necessities.

The truth is bankruptcy actually offers protection for your wages and the money you use for living expenses and everyday life.

Bankruptcy’s Automatic Stay Protects the Money You Earn

If a creditor has gone to court and received a judgement against you, depending on the state in which you reside, they might have the power to garnish your wages. Even if they cannot garnish wages, they’ll likely have access to your bank account, so unless you’re being paid in cash, they might as well be able to take your wages.

When you file for bankruptcy, something called an automatic stay goes into effect. This stops all debt collection activities against you, including wage and bank account garnishment.

This applies to all creditors, with the exception of money you owe for child support. Even the IRS must cease their collection activities under an automatic stay.

Furthermore, you might be entitled to recover some of your garnished earnings that were taken from you within the 90 days of filing for bankruptcy, but this can take some work. Your bankruptcy attorney will help you determine what you’re due to be returned and how to go about getting it when you file.

To learn more about how the automatic stay in bankruptcy works, check out this information from Cornell Law School.

What Happens after Bankruptcy?

The good news about filing for bankruptcy is it actually solves the problems you’re having. It doesn’t just give you a temporary solution or a way to make things easier until you can take more drastic action. It’s an actual solution that frees you from the burdens of your debt.

This means that once you’ve completed the bankruptcy process, the creditors listed in your bankruptcy will no longer have legal standing to collect on the debt. A creditor that had garnished your wages or was taking money from your bank account will no longer be able to do so once the debt has been discharged in the bankruptcy court.

Should You File for Bankruptcy?

If you are concerned about a creditor gaining access to the money you earn that you need to make ends meet, bankruptcy can help. The sooner you file for bankruptcy the better, too, because this allows you to protect as much of your earnings as possible.

Bankruptcy laws provide protection for your wages and ensures that the money you worked hard to earn isn’t just taken from you because you’ve fallen behind on a credit card payment or other debt.

For more information or to learn how bankruptcy can help you protect your wages, as well as many of your other assets, contact the Law Office of Robert M. Geller at 813.254.5696.