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Understanding How Chapter 7 Bankruptcy Impacts Wage Garnishments

  • Writer: Kamini Fox
    Kamini Fox
  • Aug 14
  • 3 min read

If you're facing wage garnishment or are concerned it might happen soon, you may wonder if filing for Chapter 7 bankruptcy will help or hurt your situation.

Chapter 7 Bankruptcy

Here's the answer: Chapter 7 bankruptcy does not allow garnishment of your wages. It usually stops garnishment from happening. But there are exceptions, and timing plays a big role.


What Is Wage Garnishment?

Wage garnishment is a legal process in which a creditor obtains a court order requiring your employer to withhold a portion of your paycheck. That money is then sent directly to the creditor. It can happen for debts like:

  • Credit cards

  • Personal loans

  • Medical bills

  • Court judgments


Wage garnishment can make it challenging to cover basic expenses, such as rent or groceries. It is often a last resort for creditors, but it can have a significant impact when it occurs.


Does Chapter 7 Bankruptcy Stop Wage Garnishment?

Yes, in most cases. Filing for Chapter 7 triggers an automatic stay, a court order that immediately stops most collection actions. This includes:

  • Wage garnishment

  • Debt collection lawsuits

  • Bank levies

  • Collections phone calls or letters


As long as the stay is in place, your wages should no longer be garnished for eligible debts.


How Soon Does the Automatic Stay Take Effect?

The automatic stay takes effect the moment your bankruptcy case is filed. Creditors and courts are notified shortly after, but you or your attorney can also send a copy of the filing to your employer or the court handling the garnishment.


Most garnishments stop within a few days to a week, depending on how quickly the notice is processed.


Wage Garnishments Chapter 7 Does Not Stop

There are several types of debts that Chapter 7 cannot discharge or postpone. These include:

  • Child support

  • Spousal support or alimony

  • Certain tax debts

  • Government fines or restitution


In these cases, the wage garnishment may continue even during the bankruptcy. These are considered priority debts under the law.


Can You Recover Wages That Were Already Garnished?

Possibly. If more than $600 was garnished from your paycheck within the 90 days before filing, and the debt is eligible for discharge, you may be able to recover the money. But this is a time-sensitive process and may depend on the cooperation of the trustee or the creditor.


Consult with a bankruptcy attorney promptly to determine if recovery is possible in your specific situation.


Will Garnishment Resume After Bankruptcy?

If the debt is discharged through Chapter 7, then no. The creditor can no longer pursue collection, including wage garnishment.


If the debt is not discharged, such as in the cases of child support or student loans, garnishment may resume after the bankruptcy case is completed.


Should You File Chapter 7 to Stop Garnishment?

Filing for Chapter 7 is a big decision. But if you're losing part of your paycheck and struggling to pay other bills, bankruptcy might give you the relief you need.


Chapter 7 may be a good option if:
  • You are being garnished for unsecured debts like credit cards or personal loans

  • You are dealing with multiple debts that you cannot keep up with

  • You meet the income requirements under the Chapter 7 means test


Speak with a New York Bankruptcy Attorney Today

At Kamini Fox, PLLC, we help clients across New York understand their rights, stop wage garnishment, and get a fresh financial start. We will review your situation, clearly explain your options, and guide you through the entire process if Chapter 7 is the right choice for you.


Free Consultation Available

 Call us at 516-493-9920 or contact us online to schedule your confidential case review.

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