Bankruptcy can stop garnishment of wages and bank accounts. Filing a bankruptcy case creates an automatic stay. The automatic stay prevents future garnishment of many types of debts. Whether or not filing bankruptcy will stop garnishment depends on the underlying debt which is being collected. Filing bankruptcy can stop garnishment of child support arrears, income tax liability, student loans, judgments, and many other types of debt collection.
Filing Chapter 7 Bankruptcy to Stop Garnishment
In Chapter 7 cases, garnishment ends while the case is active. If the debt that was being collected is discharged in the bankruptcy case then the garnishment will not begin again after the case is completed because the debtor no longer owes the money. However, if the debt is nondischargeable, such as child support, income tax, or student loans, then the garnishment will continue after the case is completed.
Filing Chapter 13 Bankruptcy to Stop Garnishment
In Chapter 13 cases, garnishment ends while the case is active. Priority claims, such as child support arrears and recent income tax liability, are paid in full during the Chapter 13 case. Student loans are unsecured claims but they enjoy special treatment. Garnishment of student loans stop while the bankruptcy case is active. However, since the debt is nondischargeable the creditor will be able to continue garnishment after the case is completed.
Judgments Resulting From Debt Collection and Personal Injury
Judgments that result from personal injury lawsuits or collection of unsecured debts are usually discharged in both Chapter 7 and Chapter 13 bankruptcy cases. The creditor must stop all garnishment during the case. Additionally, since the debt is discharged in the bankruptcy case, the creditor cannot continue collection of the debt after the case is completed.
Child Support and Other Domestic Support Obligations
Child support and other domestic support obligations, are special exceptions to the rules regarding garnishment in bankruptcy cases. Ongoing domestic support obligations can be garnished from wages during the bankruptcy case. However, any arrearage on the claim will be paid in full in the Chapter 13 plan. In Chapter 7 cases child support arrears are nondischargeable debt.