Bankruptcy & Arizona’s Wage Garnishment Laws

I have been meeting with a lot of people lately that have received a notice of a wage garnishment from their employer.  Wage garnishments are terrible.  You are embarrassed because your boss/HR Department now knows that you are going through financial difficulties, you may be barely getting by as it is, and now you are being told that your paycheck will be 25% less!  Bankruptcy can help in stopping wage garnishment, but first it helps to understand what Arizona’s wage garnishment laws are and what the procedure is for garnishing your check.

Arizona’s Wage Garnishment Laws

Under Arizona law, a creditor can garnish up to 25% of your net pay every pay period.  See A.R.S. 33-1131.  This means after all of your deductions are taken out of your check, your employer will be required to take an additional 25% out of your pay and provide that to the creditor who is garnishing your wages.  For example, if your paycheck is $2,000 after taxes, you would lose an additional $500 to the garnishment until the judgment against you is satisfied in full.

Garnishment Process

Before a creditor can garnish your wages, they must obtain a judgment against you.  To get a judgment, they must sue you, serve you with a copy of the lawsuit, and have a judge sign off on a judgment showing the exact amount you owe.  Without a judgment, they cannot garnish.  And once they do have a judgment there is still another step required before they can garnish your wages.  They must file an application for a Writ of Garnishment from the court.  Once the court grants that they can provide a copy to your employer who then must start withholding your pay unless the court tells them otherwise.  You have an opportunity to object and even ask the court to lower the amount they take out of each of your checks.  My experience is that most Justices of the Peace will reduce the garnishment to 15% just for asking.

Bankruptcy & Garnishment

For most, losing a full quarter of their paycheck every two weeks will make covering day-to-day living expenses very difficult.  This is where bankruptcy can help.  Filing bankruptcy will stop the garnishment immediately.  As soon as a bankruptcy case is filed the bankruptcy court issues an order called the Automatic Stay.  This order stops all collections efforts against you, such as wage garnishments, lawsuits, and even demand letters and phone calls.  Further, the bankruptcy will eliminate the judgment that the creditor has against you and eliminate/discharge the underlying debt.  Bankruptcy can truly help you to become debt free.

If you have recently received notice that your wages are going to be garnished, call me today and we can set up an appointment to quickly get your bankruptcy filing going.  I can help to quickly file your bankruptcy case so that not a single paycheck is garnished.  I can be reached at (480) 420-4028 or via email at john@skibalaw.com .

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