Stopping Wage Garnishment With Bankruptcy In Phoenix, Arizona

Inflation has the cost of living soaring ever-upwards, and it can be difficult to keep up- even with a full-time job, overtime hours, or even a second job. With the majority of American families living paycheck-to-paycheck, it’s crucial to receive full pay for hours worked in a timely manner. This leaves little space in household budgets for savings, meaning an unexpected expense could put a family in the hole. Whenever possible, the bill should be repaid or negotiated so that the person is not considered in default on the debt. If not, the creditor may end up bringing a lawsuit against the customer. If left unaddressed, the creditor can eventually use the judgment from this lawsuit to garnish the debtor’s wages. Wage garnishments are creditors’ favorite method of collection as they guarantee payment whenever the debtor gets paid. A wage garnishment can make a difficult debt situation even worse, and create a chain of events that will inevitably lead to bankruptcy. Filing your petition before it gets out of control can help you protect your paychecks, assets, and more. Learn more about the process of stopping wage garnishments with a Chandler wage garnishment lawyer by calling 480-833-8000.

Reducing a Wage Garnishment

Many types of debts can result in a wage garnishment of ¼ of your income. After taxes, insurance, and retirement contributions are deducted from your pay, this may leave little to nothing to pay for other necessary expenses. It might be possible for you to pay off the originating debt from a wage garnishment but not at as high of a rate as the garnishment, as this could cause you to miss payments on other costs of living such as rent and your car payment. A debtor who is experiencing legitimate financial hardship due to a wage garnishment can request the court to reduce the garnishment. Unfortunately, the lowest the court can reduce the garnishment to is 15%. This is still a substantial portion of the debtor’s pay and might not be enough of a reduction for the debtor to maintain a reasonable standard of living. The only way to reduce a garnishment to 0% is to pay it off, pass on, or file for bankruptcy. To learn more about how your potential bankruptcy case might proceed, call 480-833-8000 to schedule your free consultation with an experienced member of My AZ Lawyers.

Extra Costs from a Wage Garnishment

If you review the charges beyond the original debt incurred for a wage garnishment, it can be shocking. The balance for a wage garnishment is usually much higher than the original bill the debtor failed to pay. That is because the creditor can tack on extra fees to the amount owed. The creditor can charge interest of 10%. They can also add on attorney’s fees related to pursuing the wage garnishment, which can get quite expensive. There can be additional costs- for example, if the wage garnishment stems from a vehicle repossession, there may be repossession fees.

Multiple Creditors Seeking Wage Garnishment

Some debtors may have fallen so far behind on their bills that they have more than one creditor with a judgment they wish to turn into a writ of garnishment. A person can be sued by more than one creditor at once as a collection effort for an unpaid balance. Any creditors who successfully obtain a judgment will likely want to use that judgment to request a writ to garnish the debtor’s wages. While more than one creditor can pursue a lawsuit at once, only one creditor can garnish the debtor’s wages at a time. Whichever creditor submits their request first will get to proceed with their wage garnishment first. The second creditor will not be able to garnish the debtor’s wages until the first debt has been paid in full. However, they can be lined up back to back so that the debtor doesn’t experience a break between having a portion of their paycheck automatically deducted. If the debtor continues to accrue new debts due to a prolonged reduction in income, the judgments and potential wage garnishments will keep piling up. Debtors who find themselves caught in this type of situation should consider filing for bankruptcy with an experienced attorney- call 480-833-8000 for your free case evaluation with a member of our Chandler bankruptcy team today.

Paycheck-to-paycheck: How To Stop a Wage Garnishment Quickly With The Automatic Stay

Filing for bankruptcy starts the period of protection the debtor receives from the automatic stay. There is no delay between when the petition is filed and when the automatic stay goes into effect. But there could be quite a significant delay between when a debtor realizes that it is necessary to file for bankruptcy and when they have their petition ready for filing. Here, the debtor could benefit from filing an emergency bankruptcy petition.

Creating a full and accurate bankruptcy petition could take weeks or even months for both chapter 7 bankruptcy and chapter 13 bankruptcy. Someone who receives a notice that their creditor has filed a lawsuit against them, or that a creditor with a judgment has obtained a writ of garnishment, might not be able to wait that long without experiencing serious financial repercussions. In these instances, there is the option of using a skeleton bankruptcy petition to activate the automatic stay until the debtor can submit the rest of the bankruptcy petition. This gives the debtor two additional weeks to finish their bankruptcy petition, while under the protections of the automatic stay. If the debtor has retained a bankruptcy attorney for their case, all documentation should be provided in advance of that deadline to ensure there is enough time to draft and file the full petition.

What information is necessary to file an emergency or skeleton bankruptcy petition? First, the debtor should confirm that they are income-eligible for the chapter filed in the skeleton petition or risk issues and dismissal in the near future. This means they will need their pay stubs and any other proof of income from at least the past six months. Second, the debtor needs to make sure the information in their petition matches what is on their legal documents. Additionally, they will need to confirm their identity with the trustee at the 341 Meeting of Creditors. Therefore, the debtor should have their driver’s license (or other government-issued photo identification) and Social Security card (or original W-2 with the debtor’s social security number) available at the time of filing. The debtor also needs to complete their first credit counseling course before filing an emergency bankruptcy petition.

Facing Wage Garnishment, Vehicle Repossession, or Other Collection Efforts by Creditors? Stop Them Now- Fast- with Bankruptcy

A bankruptcy that is filed correctly can be life-changing for the debtor. Removing debts that result in damaging collection efforts can give the debtor a clean slate that could be crucial in getting by in the current economy. Can’t pay for bankruptcy with a wage garnishment in place? Our Chandler Bankruptcy Lawyers offer flexible payment plan options that allow you to file for chapter 7 bankruptcy in Arizona with Zero Dollars Down. To learn more with your free consultation, call 480-833-8000.