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Wage garnishment and bankruptcy

When South Carolina residents are dealing with large amounts of debt, it can be difficult to decide what to do. In some cases, creditors who are owed money may begin garnishing the wages of people who have fallen behind on payments. This can make a tough situation more complicated. In situations like these, filing for bankruptcy may provide a way out of severe debt.

Filing for Chapter 7 bankruptcy will stop wage garnishment. This type of bankruptcy effectively discharges certain outstanding debts. One of the benefits of this type of bankruptcy is that it includes an automatic stay. The automatic stay prevents creditors from obtaining repayment by wage garnishment.

Chapter 7 bankruptcy may also prevent repossessions or other types of forced repayment. Creditors may try many different methods to obtain repayment. Filing for bankruptcy limits their options by automatically removing the entirety of a person's wages from garnishment.

By law, a portion of a person's income is automatically protected from wage garnishment. For example, an employer may not garnish more than 25 percent of an employee's pay after taxes and deductions have been taken out. While this provides a small degree of protection from garnishment, it leaves a great deal of an employee's paycheck available to creditors. Chapter 7 bankruptcy protects all of a person's wages from garnishment.

Before deciding to file Chapter 7 bankruptcy, it may be a good idea to talk to an attorney. An attorney could provide advice to help a person decide if bankruptcy is the best choice. An attorney may also be able to explain the process of filing bankruptcy to a client to make the process easier to understand and manage.

Source: Credit, "Will bankruptcy stop wage garnishment?", Sally Herigstad, December 09, 2014

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