Receiving a discharge of debts through bankruptcy provides debtors with a fresh financial start. However, relief often comes sooner. Once a debtor files his bankruptcy petition, his creditors must immediately stop all collection efforts, including wage garnishments.
When a debtor files for bankruptcy, an automatic stay goes into effect. Once that happens, creditors are required to cease all collection efforts. This means debt collectors must stop calling and mailing demand letters, lawsuits cannot be filed or continued, and wage garnishments must stop. As a result, creditors cannot garnish your assets while your bankruptcy case is underway, which includes bank accounts and pay checks. Furthermore, once your debts are discharged in bankruptcy and the automatic stay ends, creditors cannot resume or pursue new garnishments for these debts because your liability for them is extinguished by the bankruptcy.
Not all debts are subject to the automatic stay. Typically, debts that cannot be discharged in bankruptcy are also not subject to the stay. For example, federal law generally prohibits the discharge of domestic support obligations, such as child support and alimony, tax obligations and most student loans. Therefore, collection action related to these debts often continues, such as wage garnishments for child support. Otherwise, it is only temporarily halted until the bankruptcy case concludes. Additionally, a creditor can request relief from the stay. If the court determines there is a valid reason to excuse the creditor from the stay, the court will approve the request and allow the creditor to continue its collection actions, including garnishments, during the bankruptcy.