Understanding Business Bankruptcy and Wage GarnishmentDallas Legal News
Finances are an individual’s biggest concern when they are going through bankruptcy. You want to hold onto as many finances as possible and stay as financially stable as possible after you have gone through one of the most difficult times in your life. A concept that might be new to you and might raise concerns is ‘wage garnishment.’ But what is wage garnishment, how does it work, and is it something that you need to worry about?
What is Wage Garnishment?
Creditors use wage garnishment as a way to collect debts from you when you owe them large amounts of money. The creditor will send what is known as a ‘garnishment order’ to your employer, who will then withhold a certain amount of money from your pay period so that it can be sent to the creditor. This continues until they are paid back in full. However, more creditors are unable to do so until they take you to court over a certain amount that you owe them. Certain creditors like the IRS or state taxing authorities are able to move forward without a court order.
According to federal law, however, the amount that can be collected from you is actually limited. This means that the creditor cannot enter a judgment that they are going to take large amounts of money from you, making it impossible for you to live or get back on track if you intend to keep your business even when bankruptcy is imminent.
How Filing a Chapter 7 Bankruptcy Can Stop Wage Garnishment
If you decide to move forward with bankruptcy when your business has fallen into debt and you are tired of dealing with the creditors or threats of wage garnishment have been thrown about, it might be time to consider the Chapter 7 process. The moment you file for this particular type of bankruptcy, the law begins to protect you. You will be entered into an automatic stay, which means that creditors are unable to take collection activity against you during your bankruptcy case.
When you file this type of bankruptcy, you will give the court a list of your creditors and their addresses so that the court is able to contact each one and let them know about the bankruptcy actions. It is important to note that, once the bankruptcy case ends, the automatic stay ends as well. The bankruptcy process might discharge the debt that was originally subject to wage garnishment, which means that your wages will no longer be garnished and you will be able to move forward.
Speaking with a Knowledgeable Bankruptcy Attorney
Perhaps the looming financial aspects present in your case have been worrying you for some time now. Perhaps bankruptcy is an idea that you have been considering but you are not sure of how you can get started. At M.J. Watson & Associates, our Texas bankruptcy attorneys have assisted many parties during this difficult but necessary part of their lives. If you are considering Chapter 7 bankruptcy, you have many options under the law and we would like to speak with you immediately. Please contact us for the help you deserve at (214) 965-8240.