Will Your Paycheck be Garnished if You File for Chapter 13 Bankruptcy?
Interviewer: But, will your employer find out? Will there be any repercussions there if you file? If you are in a Chapter 13 bankruptcy, will your paycheck be docked to pay your creditors or do you just pay them on your own?
Adam: Typically you will make the payments on your own. It won’t be a situation where your paycheck is garnished.
Bankruptcy Filing Can Stop Creditors Contacting You
Interviewer: Do you see a lot of people being harassed by creditors? They call them and that is one of the reasons that they get hounded into bankruptcy? Do you see that?
Adam: I do see similar situations. Usually, I would say, I frequently see clients who actually have a judgment against them and their wages are starting to be garnished. That is probably the most common time that they come and contact a bankruptcy attorney.
Interviewer: They are getting garnished and there is not enough money for them to live on and they are desperate for help.
Adam: Yes, paycheck garnishment can take up to 25% of your income per week so, that is a significant amount. It doesn’t leave much left for normal living expenses, especially if you are already living on a budget.
Have You Hired an Attorney? Why An Attorney Is Beneficial in the Bankruptcy Process
Interviewer: Yes, that’s a lot of money for some people. What is the benefit of having an attorney help you in a bankruptcy versus just trying to file it on your own?
Adam: Simple, it is ease. I couldn’t tell you how many hours it would take somebody that doesn’t understand bankruptcy to try and successfully file. It would take countless hours, maybe a 100, just figuring out all the details.
Then, they could always run the risk of making a mistake and not notifying a creditor and then that creditor still has a judgment against them, because he or she was never notified of the bankruptcy.
Interviewer: If you miss a creditor and you don’t put him on the bankruptcy petition, they can still come after you? They are not stopped with the bankruptcy?
Adam: yes, that is right. They didn’t have notice of the bankruptcy. They still have a judgment against you that you might have been protected from had you filed correctly.
How Will Your Creditors be Informed When You File for Bankruptcy?
Interviewer: When you file bankruptcy, does a letter go out to all of your creditors? Are they called? How are they notified?
Adam: Your creditors are notified of your filing by the bankruptcy court.
Interviewer: Are they notified by mail?
Adam: Yes, usually it is by mail. Some of them probably have access to the federal systems electronic records in which case they might get contacted that way just to ensure that they are notified.
By Adam Hunt