Laws regarding wage garnishments vary by state. However, creditors must follow bankruptcy laws related to collecting debts after a bankruptcy case is filed. Filing bankruptcy stops wage garnishments. Creditors must obtain court approval before continuing debt collection efforts. However, what happens to the debt after bankruptcy depends on the debt and the chapter of bankruptcy filed.
If your wages are being garnished or you suspect a wage garnishment order is imminent, contact 602 Law Group for a free consultation with a Phoenix bankruptcy attorney. You may have one or more options to stop wage garnishment in Arizona.
Does Arizona Allow Wage Garnishments?
Garnishment is the legal process creditors take to collect a debt after a money judgment has been entered. Before a creditor can garnish wages in Arizona, the creditor must obtain a money judgment. However, some debts may be collected through wage garnishment without a judgment, including income taxes, federal student loans, spousal support, alimony, and other debts owed to the government.
The process requires a creditor to file a lawsuit seeking payment of a debt. If you do not respond to the creditor or pay the debt, the court issues a judgment against you for the debt. Once the creditor obtains a judgment, the creditor can apply to the court for a writ of garnishment that directs your employer to garnish your wages for the debt.
Wage garnishment orders may be entered for judgments that involve credit card debts, medical bills, repossession deficiencies, foreclosure deficiencies, and personal loans.
How Much of Your Wages Can Be Garnished for Debts in Arizona?
In Arizona, 25 percent of your net income or the amount of your wages that exceed 30 times the federal minimum wage rate, whichever amount is less, can be garnished to pay a debt. Income includes salaries, hourly pay, commissions, rental income, self-employment income, and other forms of earned income. Some income is exempt from wage garnishment, including workers’ compensation, Social Security benefits, unemployment compensation, and most retirement benefits.
For many people, losing any portion of their take-home pay can make it impossible to pay living expenses and other debts. Therefore, we strongly urge you to review your options for stopping wage garnishments in Arizona.
What Options Are Available for Stopping Wage Garnishment in Arizona?
Options for stopping a garnishment include petitioning the court to reduce the garnishment amount because it creates a severe hardship. There could also be extenuating circumstances that might help you get the wage garnishment reduced.
You can attempt to settle the debt, but that usually requires a lump sum payment. You may also try to overturn the original judgment. However, fighting the original judgment is usually time-consuming, difficult, and not successful.
Your best option for stopping wage garnishment may be filing a Chapter 7 or Chapter 13 bankruptcy case.
Filing Bankruptcy to Stop Wage Garnishments
Filing a Chapter 7 or Chapter 13 bankruptcy case stops the garnishment. If the underlying debt is dischargeable in bankruptcy, you eliminate the debt and the wage garnishment by completing your bankruptcy case.
However, if the debt is not dischargeable, the wage garnishment may continue during your bankruptcy case if the creditor receives approval from the bankruptcy court. The creditor may also wait until after your bankruptcy case closes to resume wage garnishment. Examples of non-dischargeable debts include most taxes, student loans, alimony, child support, and other debts owed to the government.
Filing Chapter 13 bankruptcy can eliminate non-dischargeable debts. Non-dischargeable debts are paid in full through your Chapter 13 plan. As long as you pay your Chapter 13 payments, the creditor cannot resume wage garnishments.
Contact Our Arizona Bankruptcy Attorneys for More Information
Wage garnishment can be frustrating and frightening. Do not panic if you receive a wage garnishment order. You may have one or more options for stopping wage garnishments.
Contact 602 Law Group for a free consultation with a Phoenix bankruptcy attorney by calling 602-562-5000.