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Using Chapter 7 bankruptcy to stop wage garnishment

In many cases, creditors have the right to garnish the wages of people living in Washington, D.C. As the law states, an employer can withhold income from a worker who is indebted to a creditor. However, the law also notes that if a court issues a written notice that attacks the judgment to garnish wages, the employer will have to stop. That is how filing for Chapter 7 bankruptcy can put a stop to wage garnishment.

Anytime someone files for bankruptcy, there is an automatic stay created that will prohibit most creditors from collecting on debt. A creditor that disagrees with the stay will have to ask the court to lift the order, though there must be a valid reason for doing so.

As Bankrate.com points out, debtors should not assume that the wage garnishment will stop simply because the paperwork for bankruptcy as been filed. Either the debtor or his or her attorney will have to contact the appropriate parties to give notice of the automatic stay that the filing has created.

There are three situations in which the automatic stay on withholding income will cease, and those are the following: 

  •        If a judge orders the stay to be lifted
  •        If the bankruptcy case is dismissed
  •        If debts are discharged through bankruptcy

If the debts are discharged, including the debt for which a creditor was garnishing wages, the creditor may not try to resume garnishment. However, if the bankruptcy case was dismissed or the stay is lifted, a creditor is allowed to continue the practice.

It is important to note that these laws only apply to certain debts. Child support or alimony payments, for example, are not subject to an automatic stay. 

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