Automatic Stay and Wage Garnishment in California following Bankruptcy
Federal laws in the US create an automatic stay following a bankruptcy claim. This protection serves to bar creditors and debt collectors from attempting to extract payment from you as a means to recover their debts. With the automatic stay in effect, the creditors will not be able to file collection lawsuits compelling you to repay their debts. A critical question many ask, however, is whether such orders would prevent wage garnishment following the bankruptcy.
To answer that, it is essential to understand the basics of bankruptcy in financial challenges.
Wage garnishment is the legal procedure whereby a creditor compels your employer to hold a portion of your salary to pay off your debts. In California, wage garnishment can only occur through a court order.
The possibility of having your wages garnished is often a frightening factor for employees in California as it draws one’s employer into their personal life and finances, causing both humiliation and financial hardship. Also, such a step could push the employer to terminate one’s service if they are facing multiple debts from creditors.
While California laws protect you from retaliation following wage garnishment over a single debt, it would not save you from the same if you are having problems with several creditors seeking a portion of your wage. Thus you face an actual risk of losing your job in such an instance.
How then can you stop creditors from seeking wage garnishment?
In California, the state laws allow you to defend yourself against the creditor’s lawsuit by providing proof of your condition. You would thus be required to prove that your entire paycheck is necessary to pay your living expenses and that you qualify for an exemption. An alternative way would be to file for bankruptcy.
A bankruptcy claim, through its automatic stay orders, would effectively shield you from wage garnishment. However, the orders will not be applicable for debts such as child support, student loans and government fines. Alimony and non-dischargeable debts will also not prevent your wage from being garnished even after filing for bankruptcy.