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If you are facing insurmountable debts in Rockland County, filing for bankruptcy might be a good option for you. This is especially true if you are dealing with wage garnishments that take chunks of your paycheck away before it even has the chance to hit your account. However, it’s important to know how the automatic stay from bankruptcy works and how garnishments can be affected before you file. A Rockland County Chapter 13 bankruptcy lawyer from our firm can help you.

Will Filing for Bankruptcy Stop Wage Garnishments?

Yes, this process can put a stop to most types of wage garnishments in Rockland County and throughout New York. This is because the automatic stay issued once you file can put a stop to debt collection activities, and this includes the garnishing of your wages. This stay could only last for a short while, though, so it’s necessary to get the bankruptcy process underway so that you can begin addressing your debts.

How the Automatic Stay Works

  • The automatic stay goes into effect immediately after filing
  • It prohibits all collection efforts
  • Wage garnishment orders are paused immediately upon notice
  • Employers are legally required to stop withholding wages
  • Creditors who violate the automatic stay can face penalties

Timing Considerations

  • Employers or creditors may not immediately receive notice of the stay
  • Garnishment may briefly continue until the notice is processed
  • An attorney can immediately contact employers to speed up relief
  • Quick filing can prevent additional lost wages

What Types of Wage Garnishments Won’t Be Stopped?

Not all wage garnishments can be stopped in this manner, though. While the automatic stay is a powerful federal tool, some debts are exempt and, as such, may continue during your bankruptcy process.

Garnishments That Typically Continue

  • Child support arrears
  • Alimony or spousal maintenance orders
  • Certain tax debts
  • Court-ordered domestic support obligations

These debts are treated differently because federal law prioritizes family support, which is also favored by public policy. As such, bankruptcy cannot discharge most domestic support debts.

Federal vs. New York Wage Garnishment Limits

It’s important to understand that there are both federal and state limits on wage garnishment, and whichever statute provides more protection to the workers is generally the one that will apply. As such, familiarizing yourself with these limits is critical to protecting your paycheck and determining whether or not bankruptcy is right for you.

Federal Wage Garnishment Limits

Under federal law, wage garnishment is typically capped to protect against extreme hardship for workers. As such:

  • Creditors may garnish up to 25% of disposable income
  • The amount by which weekly wages exceed 30 times the federal minimum wages
  • Disposableincome is any wages that remain after legally required deductions
  • These limits apply nationwide

New York Wage Garnishment Limits

New York State has its own laws to help provide additional protections to workers. This includes:

  • Garnishment that is typically limited to the lesser of:
    • 10% of gross wages, OR
    • 25% of disposable income
  • Workers earning near minimum wage may be fully exempt from garnishment
  • New York law helps ensure basic living expenses remain covered
  • This protection applies to most creditors who operate in New York State

It’s important to understand that, in many instances, New York;s lower limits will override federal maximums. This is because the courts must adhere to the law that protects the employee more.

Can Wage Garnishments Continue After Bankruptcy?

It’s important to understand that, though you may receive temporary collection relief during your filing, it may not last permanently. Whether wage garnishment will resume depends on the type of debt involved and which bankruptcy chapter you’ve filed.

Situations Where Garnishment May Resume

  • Non-dischargeable tax debts
  • Failure to complete a Chapter 13 repayment plan
  • Case dismissal or conversion
  • Creditor relief from the automatic stay

Chapter 7 vs. Chapter 13

  • Chapter 7 may entirely eliminate unsecured debts at the completion of the plan
  • Chapter 13 can stop garnishment during the course of the payment plan
  • Some creditors may regain collection rights at the end of your case

When Does Wage Garnishment Begin in Rockland County?

Understanding how wage garnishment works and when it starts can help you understand more about why bankruptcy may be your best option.

Typical Garnishment Process

  • Creditor attempts collection efforts
  • When voluntary collection fails, a lawsuit will be filed
  • The Rockland County court will review the matter and enter a judgment
  • The court will then issue a garnishment order
  • Upon receipt of the garnishment order, your employer will begin withholding your wages

Garnishments That Do Not Require a Court Judgment

Some debts, due to their nature, do not require a court-ordered judgment. These include:

Are There Other Ways to Stop Wage Garnishment?

While bankruptcy can be incredibly helpful in stopping wage garnishments, it is not the only option. You may be able to stop this withholding without the long-term consequences of filing for bankruptcy.

Non-Bankruptcy Options

  • Paying the debt in full
  • Negotiating with creditors
  • Requesting a hardship exemption
  • Consolidation of debts
  • Participation in a credit counseling program

When Alternatives May be Ideal

  • The garnishment balance is smaller
  • You anticipate an increase in income
  • Keeping your credit score high is a priority
  • Debt is limited to one creditor

Is Bankruptcy the Best Option for Me?

While bankruptcy can provide substantial financial relief, it can also have significant consequences. As such, understanding whether or not this is the best financial option for you before filing is critical.

Factors to Consider Before Declaring Bankruptcy

  • Total amount of debt
  • Type of debt resulting in garnishments
  • Stability of your income
  • Your long-term financial goals
  • Impact on credit

Debts Not Easily Discharged

  • Recent income tax liabilities
  • Student loans
  • Domestic support obligations

Talk to a Rockland County Bankruptcy Attorney

If you are considering filing for bankruptcy in Nanuet, Nyack, or anywhere in or around Rockland County, the Lauterbach Law Firm is here to help. We can tell you more about this process and whether it’s the right option for you. Contact us today to learn more about your legal options.