Life After Wage Garnishment: Can You Live on Less?

Image courtesy of Stuart Miles / freedigitalphotos.net

Some people are living paycheck to paycheck with no savings to rely on if there is a crisis.  Those people may also be behind on their bills and are facing judgments from their creditors.  In some cases, that person may be unaware that a creditor has gained a judgment to garnish their wages until they see less money in their paycheck.  If this happens to you, can you live with up to 25 percent less of your paycheck? What bills will not get paid if this happens to you? How will your family survive?

You can protect yourself and your wages from garnishments.  Filing bankruptcy can keep creditors from getting your money and help you get back on your feet.  You may also be able to keep many of your assets.  You have two bankruptcy options:

• Chapter 7:  This will wipe out your debts.  If you are worried about keeping your house or car, you can file to keep them by asking for an exemption.  This is called the “fresh start” bankruptcy because you are no longer responsible for paying the debts included in the bankruptcy. 
• Chapter 13: This is like a debt reorganization that protects you from your creditors.  Basically, you will be able to pay off your debts, often at a reduced interest rate and keep your property.  If you are a homeowner, there is a program that can eliminate your second mortgage or home equity loan and just pay off your first mortgage.  In a Chapter 13, you will be making a monthly payment to a bankruptcy trustee for three to five years. 

What happens if you wait too late to file for bankruptcy protection? Garnishments can proceed and you could be forced to live on less.  That could cause you to get behind in your other bills like your mortgage or car payment.  A bankruptcy protection plan keeps your assets and money safe from creditors. 

Deciding to file bankruptcy is a decision that should be well-thought out and discussed with your family.  It is not an easy process and it’s not an option for everyone.  Our firm has helped hundreds of South Florida families avoid wage garnishment.  But you must not wait until the wolves are at the door before you protect your assets.