Formally known as an Earnings Withholding Order, or EWO for short, a wage garnishment can seriously affect a debtor’s ability to maintain a minimal standard of living sufficient to pay for necessities like food and housing. That is because a wage garnishment typically takes a 25% chunk out of a debtor’s paycheck. Fortunately, most wage garnishments can be stopped within a few days of filing for bankruptcy.
There are different types of debts that can trigger a wage garnishment, including those for court ordered judgments for credit card debt, back taxes, delinquent student loan payments, and for back child support or alimony. In California, a garnishment order usually takes effect approximately 10 days after a judgment creditor, taxing authority, or family court serves the wage garnishment order served upon the debtor’s employer. In California, normally the order requires the individual’s employer to deduct 25% of each day’s wage until the entire debt is paid. That is unless the debtor files for bankruptcy.
Garnishment in Bankruptcy Proceedings
Filing for bankruptcy may provide relief. While often misunderstood due to negative connotations, people file bankruptcy for many reasons, including for medical debt and economic losses from a change in work circumstances. As such, filing bankruptcy may be a viable solution to stop wage garnishment. A qualified bankruptcy attorney at RJS LAW will work with you to stop wage garnishment and is able to file your bankruptcy on an emergency basis to stop further wages from future garnishment. In most cases, bankruptcy does not lead to the liquidation of any assets to pay off creditors.
Procedure to Stop a Garnishment After Filing Bankruptcy
Once your attorney electronically files your bankruptcy case, the fastest way to stop a wage garnishment is to provide evidence of the bankruptcy filing to the specific sheriff’s civil division office which is listed in the top right corner of the Earnings Withholding Order. Usually, the sheriff’s civil office executing the garnishment will be in the county which the garnishee judgment debtor is employed.
If the debtor’s attorney files the bankruptcy without subsequently notifying the sheriff to stop the wage garnishment, the garnishment will continue until the judgment creditor receives the notice of the bankruptcy filing through the mail and takes the affirmative step of notifying the sheriff on its own. Although it is the creditor’s responsibility to halt future wage collections, delays in the mail plus any lack of diligence on the part of the creditor may extend the period of garnishment for up to several more weeks.
Assuming the underlying debt is a dischargeable type of debt like a credit card, once the sheriff receives the notice, it will send a written notice called a stay to the debtor’s employer notifying it to immediately stop the wage garnishment. In most bankruptcy cases, the employer stops garnishing wages less than a week after the bankruptcy is filed.
If the wage garnishment is for a tax debt, directly contact the taxing authority to notify it of the bankruptcy filing and request the garnishment be stopped. Usually, this is done with a phone call and fax of the notice of bankruptcy filing. Doing so will likely stay the wage garnishment at least a week sooner than waiting for the creditor to stop it on its own.
For a domestic support obligation (DSO) like child support or alimony, in most cases a bankruptcy does not stop a garnishment. In addition, a DSO debt would survive the debtor’s bankruptcy discharge.
While this may sound like a complicated process, with the right bankruptcy team these tasks can be managed seamlessly. The key is constant communication between the attorney and client to ensure the proper steps are completed such that the garnishment can be stopped soon after a bankruptcy case is filed.
The veteran bankruptcy legal team at RJS LAW can help stop wage garnishment. For a free, no-obligation confidential case review and discussion of different options, call us today at (619) 595-1655.