Falling behind on your payments and accumulating a significant amount of debt is a frustrating process — one that may be the result of factors far beyond your control. Medical bills, job loss, unexpected expenses and more could all lead to a debt burden that you cannot manage on your own. Stress and insecurity are two of the consequences you may experience as a result of having a lot of debt, but you could also experience more tangible effects.
After falling behind on your payments, you will likely begin to receive phone calls from creditors and debt collectors. You may also receive letters, and you could start receiving messages at all hours, including while you are at work. Another potential consequence of owing a significant amount of debt is wage garnishment. This could lower your monthly income, making it even less likely that you will be able to catch up on your own.
Withholding a portion of your wages
Wage garnishment is a debt collection method that occurs by an employer withholding a portion of one’s paycheck in order to pay off balances. The amount withheld goes to creditors and toward outstanding debts. In order for wage garnishment to happen, the creditor must first pursue a court order. If granted, your employer will receive notice to begin withholding a portion of your wages. This will continue until you have paid off the debt completely or file for bankruptcy.
There are limits to how much of your paycheck your employer can withhold, depending on the type of debt you owe and how much you earn. For example, if you have medical debt, a creditor can seek to garnish as much as 25% of your paycheck or 30 times the amount by which your income exceeds the federal minimum wage. If you file for bankruptcy, the automatic stay will go into effect, which means all debt collection efforts will halt. This includes wage garnishment, foreclosure and more.
Other benefits of bankruptcy
By halting wage garnishment, bankruptcy will give you the opportunity to reclaim the full amount of your earned wages. This will allow you to follow the terms of your bankruptcy plan and take care of your own personal needs during this process. Bankruptcy is also beneficial in that it provides you with the opportunity to address an ongoing debt problem and seek a better financial future for you and your Georgia family.