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Will Bankruptcy Stop Wage Garnishment?

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In a Nutshell

Wage garnishment is a tool used by creditors to collect their debts through the court. Filing for bankruptcy will not only temporarily solve your wage garnishment problems, but potentially eradicate them altogether.

Written by Jonathan Petts
Updated August 17, 2020

Wage garnishments can be an extremely stressful and difficult financial burden to manage. They leave individuals feeling powerless, and often lead to a cycle of debt. Fortunately, Chapter 7 bankruptcy provides individuals with the opportunity to lift this burden.

What Is Wage Garnishment?

Wage garnishment happens when a court issues an order requiring your employer to withhold a portion of your paycheck and to send it directly to a creditor that you owe.  In general, your paycheck continues to be garnished until the debt is paid off in full or otherwise resolved.

A wage garnishment lasts until the debt is completely paid off. While this helps creditors obtain debts from borrowers, a lot of times it wreaks havoc on a borrower’s financial situation. Even though most of your wages are protected from garnishment, it can still have a serious impact on your income. For example, so long as there is only one debt being garnished from your wages, your employer cannot retaliate against you because of wage garnishment. However, if multiple creditors are garnishing your wages, then your employer can renegotiate the terms of your employment. Consequences like these lead to many people being trapped by their debts, creating a cycle of financial instability.

Can Chapter 7 Bankruptcy Stop Wage Garnishment?

Yes! Once a bankruptcy case has been filed, the automatic stay will prohibit the continuation of any garnishment not for a domestic support obligation.

What Is An Automatic Stay?

If you’re struggling to repay a substantial amount of debt, then you’ve likely considered bankruptcy. While it can be an intimidating topic, the truth is that bankruptcy exists to help struggling individuals get back on their feet. Chapter 7 bankruptcy has different aspects built in that ease the burden of debt and give you a second chance at financial freedom. The first way that bankruptcy offers relief is through the automatic stay.

The automatic stay means that for the duration of your bankruptcy filing, none of your creditors are allowed to pursue their debts. This includes creditors, collection agencies, and government entities. No more phone calls, letters, or emails and definitely no more wage garnishment (except for domestic support obligations). They can’t take any actions against you due to your debt. As soon as you submit your bankruptcy petition, the court will send a notice to each of your creditors and inform them that you filed, and about the limits imposed on them by the stay.

Relief from Creditors and Debts

Almost all forms of wage garnishment are halted by an automatic stay. Even if you have multiple creditors enforcing wage garnishment on your paychecks, they can usually be stopped by filing for Chapter 7 bankruptcy and then erased if you receive a discharge. Filing for bankruptcy will not only temporarily solve your wage garnishment problems, but potentially eradicate them altogether.

Recover Lost Wages

If you are filing for bankruptcy within 90 days of the beginning of your wage garnishment, you may even be able to recover some of your lost wages. Your wages can only be protected up to a certain amount, so you likely won’t be able to recover all of your losses that occurred due to garnishment. Still, if you’re considering bankruptcy shortly after having a garnishment imposed on your earnings, you may be able to recoup some of your lost finances.

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Exceptions to the Automatic Stay

It’s important to note, however, that not all forms of wage garnishment can be halted through an automatic stay. Sometimes this depends on the type of debt, other times it depends on how many times you’ve filed bankruptcy in the recent past. 

Domestic Support Obligations

These garnishments are protected by law, and therefore cannot be removed for any reason other than a change in your domestic circumstances. So if this kind of wage garnishment is the only reason you have for seeking bankruptcy, you should look at other solutions first.

Multiple Bankruptcy Filings

If you filed for bankruptcy within the past year and had your case dismissed, then your automatic stay will only be in effect for 30 days. You can ask the court to extend this timeframe, so long as you can prove that the first filing was in good faith (meaning that you truly believed you would be approved for bankruptcy, and were not simply filing to hold off creditors).

Along the same lines, if you filed for bankruptcy twice within the past year and go to file for the third time, you will not be granted an automatic stay. The reason these rules exist is to prevent individuals from abusing the automatic stay. Without these rules, debtors could file for bankruptcy an indefinite amount of times to avoid repaying their debts. You can still ask the court to instate an automatic stay on your third filing, once again by proving that the previous two filings were made in good faith.

What About After Your Bankruptcy Is Over?

While an automatic stay provides great relief from the pressure of wage garnishment, it’s not a permanent hold against your creditors. Once your bankruptcy filing is complete, you lose the protection of the automatic stay. However, your discharge will protect you from creditor actions for most, if not all of your debts. If your wages were getting garnished for a credit card bill, deficiency balance after a repossession, or medical debt and not for a nondischargeable debt, the garnishment cannot start up again after your case is closed. 


If you’re encountering financial distress as a result of wage garnishments, filing for Chapter 7 bankruptcy might be the best way to resolve the issue. Not only will it halt your garnishments for a short period of time, but it has the likely potential to eliminate those debts altogether.

Written By:

Jonathan Petts


Jonathan Petts has over 10 years of experience in bankruptcy and is co-founder and CEO of Upsolve. Attorney Petts has an LLM in Bankruptcy from St. John's University, clerked for two federal bankruptcy judges, and worked at two top New York City law firms specializing in bankrupt... read more about Jonathan Petts

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