Does Bankruptcy Stop Wage Garnishment in Pennsylvania?

When you file for bankruptcy, the bankruptcy court issues an “automatic stay.”  This stops creditors and collectors from coming after you, but can it stop everything?  Is wage garnishment covered under this automatic stay?

The automatic stay you receive when you file is powerful and can stop many kinds of collections, but it does not stop all wage garnishment.  Whether a particular garnishment order is stopped or not will depend on its purpose.  If the garnishment is for a debt, then yes, it will usually stop; if it’s for child support or alimony, then it will not stop.

Call our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519 for a free case review today.

What is an Automatic Stay in a Pennsylvania Bankruptcy Case?

When you file for bankruptcy, debt collection is automatically paused.  This is because the court automatically “stays” (stops) any collection efforts while they analyze your debt, see if you are eligible for bankruptcy, and carry out your case.

This automatic stay is incredibly powerful and can give you a breather or even a new lease on life.  While the automatic stay is in place, creditors cannot…

• Collect on the debts
• Activate attachment or sell off your property to collect on the debt
• Send you new bills
• Call you
• Have collections agencies call you.

If they do contact you or try to collect debts subject to the bankruptcy, then you can show them the automatic stay – or direct them to our Pennsylvania bankruptcy attorneys – and that should shut down further collection attempts.

It is one of the most important parts of filing for bankruptcy, and having the automatic stay in place will be the first sign that this system is really working for you.

What Does an Automatic Stay Cover?

The automatic stay in your case will stop all debt collection covered under the petition.

This means it stops collection on your debt, but not anyone else’s.

It also only stops collection on debts that existed before the petition.  If you file your bankruptcy petition, obtain an automatic stay, and then go take out a loan the next day, it will not be halted by the stay.

Does an Automatic Stay Stop Wage Garnishment?

If you were already at a point where a creditor had a wage garnishment order against you, then the automatic stay should stop that.  However, it might not stop other garnishments like child support or alimony.

As mentioned above, your automatic stay will only stop collection efforts for the covered debts in this bankruptcy petition.  If you signed a release for a new debt to garnish your wages after filing for bankruptcy, that certainly wouldn’t be covered.

Wage garnishment also only stops if it is for a debt.

Does Bankruptcy Stop Wage Garnishment for Alimony or Child Support?

Wage garnishment is commonly used to enforce divorce and custody orders, making sure the person pays child support or alimony.  Automatic stays do not interfere with these payments and cannot stop wage garnishment for alimony or child support.

Does an Automatic Stay Cover Withholding?

If your employer withholds money from your pay for other reasons outside of garnishment, that typically will not stop with an automatic stay.  For example, if you have retirement accounts that they withhold funds for, those withholdings will continue.

Some of these are not required in any way, and you may be able to ask your employer to suspend them or stop withholding while you are in a tough financial spot and need more free income.

However, you can’t stop withholding for taxes.  Your employer is required to take out and pay state, federal, and local taxes.  They also cannot stop withholding Social Security or disability taxes.

How Do I Know if My Automatic Stay Will Cover Certain Debts or Garnishments?

The best way to understand your bankruptcy petition and automatic stay is to talk to a lawyer about it.  Our attorneys can go over your debts with you, along with any other payments or withholdings you might have questions about, and let you know whether they should be covered by the automatic stay under the Bankruptcy Code’s specific provisions.

How Quickly Does the Automatic Stay Go Into Effect?

The automatic stay should go into effect immediately and automatically, with nothing else to be done on your part.  The fact that you filed your bankruptcy petition should, itself, be enough proof to show any creditors that they need to stop harassing you or garnishing your wages.

However, you also need to actually give creditors notice of the stay, or else they will not know it is in effect.  Talk to your lawyer about the process for doing this.

What Should I Do if Garnishment Goes Through Anyway?

If you have a debt that is supposed to be stopped by the automatic stay, then you have a few ways of addressing the situation.  Our attorneys can also advise you on next steps.

For one, you should make sure you have a copy of the stay order so that you can contact the creditor and tell them about your stay.  They should not be garnishing wages in violation of a court order, and they can be made to reimburse you for any garnishment that should have been stayed.

You can also contact your employer if you are willing.  They must have an actual order to garnish wages in the first place, and they cannot just go off of a creditor’s request.  In the same way, once there is an order in place halting garnishment, they have to stop.  They cannot continue to garnish your wages once the automatic stay is in place.

In any case, though, our lawyers can also help you contact the right parties, show them the order, and help convince them to follow the law.  Automatic stays are quite powerful orders, and violating these orders can get other parties, creditors, and employers in trouble with the law.

Call Our Pennsylvania Bankruptcy Attorneys Today

For your free case evaluation, call Young, Marr, Mallis & Associates’ Allentown, PA bankruptcy lawyers at (215) 701-6519 right away.