What Happens to a Garnishment in a Bankruptcy Case in Alabama
If you are facing garnishment and file for bankruptcy, the automatic stay that goes into effect as part of the bankruptcy process will typically halt the garnishment until the bankruptcy case is resolved. There are two main types of bankruptcy that individuals may consider when facing a garnishment: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 bankruptcy is a type of bankruptcy that involves the sale of non-exempt assets to pay off as much of the individual’s debt as possible. After the sale of assets, any remaining unsecured debts (such as credit card debt) may be discharged or eliminated. If you are facing a garnishment and are eligible for Chapter 7 bankruptcy, you may be able to have the garnishment lifted, and the underlying debt discharged through the bankruptcy process.
Chapter 13 bankruptcy is a type of bankruptcy that involves the creation of a repayment plan to pay off a portion of the individual’s debts over three to five years. If you are facing a garnishment and are eligible for Chapter 13 bankruptcy, you may be able to have the garnishment lifted and pay off the underlying debt through the bankruptcy repayment plan.
The automatic stay provided by bankruptcy is an important tool for individuals facing a garnishment. A garnishment can be a difficult and stressful experience, as it involves the seizure of a portion of an individual’s wages or bank account to pay off a debt. The automatic stay provided by bankruptcy can provide relief by halting the garnishment and giving the individual time to explore their options and develop a plan to deal with their debts.
While bankruptcy can often help individuals get rid of garnishment, it’s important to understand that bankruptcy is not the right solution for everyone. It’s important to carefully consider all of your options and seek the advice of a Montgomery bankruptcy lawyer to determine the best course of action for your specific situation.
To be eligible for Chapter 7 bankruptcy, you must pass a means test, which compares your income to the median income for your state. If your income is above the median income, you may not be eligible for Chapter 7 bankruptcy and may need to consider Chapter 13 bankruptcy instead.
If you are facing garnishment and are considering bankruptcy as a potential solution, it’s important to act quickly. The longer you wait, the harder it may be to catch up on missed payments and get your finances back on track. A bankruptcy attorney in Prattville can help you understand your options and guide you through the bankruptcy process. It’s essential to understand that the automatic stay provided by bankruptcy is not permanent and may be lifted by the court if the creditor requests it. For example, if the creditor can show that the automatic stay is causing them undue hardship, the court may allow the garnishment to proceed.
In addition to the automatic stay, bankruptcy may also provide other forms of relief for individuals facing a garnishment. Depending on the specific circumstances of your case, bankruptcy may allow you to:
- Discharge certain unsecured debts: If you have other debts, such as credit card debt or medical bills, that are contributing to your financial distress, bankruptcy may allow you to discharge (eliminate) these debts. This may help you free up additional funds to put towards the garnishment.
- Create a repayment plan: If you are unable to pay off the underlying debt in full, bankruptcy may allow you to create a repayment plan that is feasible for your financial situation. This may include extending the repayment period, reducing the interest rate, or reducing the principal balance.
- Modify the terms of your mortgage: If you are facing a garnishment due to missed mortgage payments, bankruptcy may allow you to modify the terms of your mortgage to make it more affordable. This may include extending the repayment period, reducing the interest rate, or reducing the principal balance.
It’s important to understand that bankruptcy is a serious decision and should not be taken lightly. It’s important to carefully consider all of your options and seek the advice of a bankruptcy lawyer in Millbrook, or anywhere else in Alabama, to determine the best course of action for your specific situation.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!
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