Wage garnishment is never a good thing. But garnishments seem to always hit at the worst possible time. Your thoughts race – “how am I going to pay my bills? How am I going to buy groceries?” In Arizona creditors can garnish a full 25% of each paycheck. If you are living payday to payday any amount would be tough but a full 25% of your check can be down right devastating.
The good news is you can stop your wage garnishment very quickly. The bad news is it will likely require the “b” word – Bankruptcy.
If you are facing a wage garnishment and can’t afford to have even one paycheck garnished you can stop it by filing for bankruptcy. As soon as a bankruptcy case is filed your bankruptcy judge will issue an order to all of your creditors that will require them to stop any type of collection activity – including wage garnishment. Here the the three steps to make the garnishment stop before your next paycheck:
#1 – Hire an Attorney
I know, I know. Of course I am going to start with this one. But the truth of it is, bankruptcy can be a minefield with problems lurking at ever turn. If you don’t know what you are doing you could be in for a world of hurt. If you need to file bankruptcy quickly you especially need a lawyer. Don’t go this battle alone. It could end up costing you a lot more than the 25% of your wages you saved by filing on your own.
#2 – Complete the Required Credit Counseling Course
Back in 2005 they changed the Bankruptcy Code and now you must take an approved credit counseling course before your bankruptcy case can be filed. Not to worry, this “course” is actually an online course that generally takes about an hour and can be done 24 hours a day. Once this is complete your bankruptcy case can be filed.
#3 – Pay Your Legal Fees and Your Court Costs
Before you can file a chapter 7 bankruptcy you will need to pay your attorney(click HERE to see what I charge for a bankruptcy) and the filing fee that is charged by the court. Often people will ask me if they can make monthly payments. Unfortunately the answer is no. The reason being is that if my clients owe me money, and then I file their bankruptcy, I actually become a creditor of my client! As you can see, that would cause a conflict for the attorney.
While these three steps may seem fairly simple, it is important to understand that this is by no means everything that is involved in a bankruptcy case. The typical bankruptcy filing is between 45-60 pages of information on you and your finances. The court allows you to do an emergency filing to stop the garnishment and only requires you to file the first three pages of that big stack. Then, you and your attorney have an additional two weeks to get everything else drafted and filed with the court.
As soon as your bankruptcy is filed the bankruptcy court will issue an order that can be provided to your employer and will stop the garnishment.
Quick pointer – When timing your bankruptcy filing you need to be aware of when your employer processes payroll. If you get paid on Friday but your employer processes payroll on Tuesday then in order to stop the garnishment of the Friday paycheck it will be necessary to file your bankruptcy before it is processed on Tuesday. That is not to say you won’t get that money back if they do garnish it after you have filed bankruptcy, but if your goal is to keep as much of your money as possible you will want to file the bankruptcy before payroll is processed.