How To Avoid Wage Garnishment – File Bankruptcy
If you need to avoid wage garnishment in North Carolina, filing bankruptcy is most likely your best option. While North Carolina limits the type of debts which can be garnished, if you want to avoid wage garnishment altogether, bankruptcy is an option which will halt wage garnishment under federal law.
North Carolina Types Of Wage Garnishment
Generally, North Carolina limits the type of debts that can be garnished. Child support, Student Loans, Taxes, Ambulance Bills, and Unemployment Over payments can be garnished. Additionally, if a general unsecured creditor obtains an out-of-state judgment, they may be able to garnish wages in North Carolina.
General Limitations On Wage Garnishment
North Carolina does limit the amount of your wages which can be garnished. Below are a few times of garnishments and the general limitations placed upon them.
The North Carolina Department of Revenue — (Taxes) can only garnish 10% of your gross wages.
Out of state creditors — can garnish 25% of your disposable income or the amount by which your disposable income exceeds 30 times federal minimum wages, whichever is less.
Child Support – can be garnished up to 50% of your disposable earnings.
Defaulted Student Loans – can be garnished for up to 15% of your disposable income.
How Can Bankruptcy Help With Wage Garnishment?
When you file bankruptcy, the Automatic Stay in bankruptcy prevents creditors from contacting you and attempting to collect on debt. Wage garnishment is of course an attempt to collect a debt. The court notifies your creditors about the filing of your bankruptcy, and they are bound to abide by the Automatic Stay unless they successfully apply for relief from the Automatic Stay. Most creditors do not pursue relief from the Automatic Stay.
Avoid Wage Garnishment With Chapter 7
If you file a Chapter 7, typically your Chapter 7 filing will only give you temporary relief from most of the types of debts which are associated with wage garnishment. The types of debt that can potentially be addressed in full with a Chapter 7 filing are: judgments from general creditors, tax debt older than 3 years old, judgments from mortgage and vehicle debt. While a Chapter 7 filing won’t address child support, student loans, or new tax debt, it will give you roughly a 4 month break from it. The reason is that most creditors simply wait for your Chapter 7 to close out and then begin to attempt to collect or garnish debt at that time. Many times, filing a Chapter 7 eliminates enough other debt that you can successfully address the debt which survives the Chapter 7. We’re happy to walk you through it.
Avoid Wage Garnishment With Chapter 13
Chapter 13 not only stops wage garnishment, but forces all garnishing creditors to allow you to propose a 5 year plan to repay that debt. Most of the time, paying that debt back over a 5 year period—with caps on interest and penalties—makes the debt manageable. In addition to helping you avoid wage garnishment, the Chapter 13 also forces vehicle lenders to lower their interest rate to the court-ordered “Till”rate which may be lower than you are paying on your vehicle loan currently. There are numerous other benefits to a Chapter 13, and if you reach out to us we can quickly help you decide if you should consider a Chapter 13 filing.
Bankruptcy Vs. Garnishment
In all but the most rare cases, the amount you will pay to file a bankruptcy will help you save thousands of dollars over wage garnishment. It also forces creditors to allow you to keep enough of your paycheck to live comfortably while ‘catching up’ on your debt in Chapter 13, or quickly eliminating it in Chapter 7.
Speak With A Charlotte Bankruptcy Lawyer Today
If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.
Further Reading
If this article was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.