How to Stop Wage Garnishment Through Bankruptcy in Maryland

How to Stop Wage Garnishment Through Bankruptcy in Maryland

Wage garnishment can be a significant financial strain, especially for those facing overwhelming debts. If you find yourself in this situation in Maryland, understanding how bankruptcy can help halt wage garnishment is essential. Here’s a guide on stopping wage garnishment through bankruptcy in Maryland.

Understanding Wage Garnishment

Wage garnishment occurs when a court orders an employer to withhold a portion of an employee's paycheck to satisfy a debt. Common types of debts that may lead to garnishment include credit card debts, personal loans, and unpaid taxes. In Maryland, creditors typically need to obtain a court judgment before they can garnish your wages.

How Bankruptcy Stops Wage Garnishment

Filing for bankruptcy is one of the most effective ways to stop wage garnishment. When you file for bankruptcy, an automatic stay goes into effect, which halts all collection actions, including wage garnishment. This legal provision gives you the breathing room needed to reorganize your financial situation.

Types of Bankruptcy

There are two main types of bankruptcy individuals can file for in Maryland: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy involves liquidating most unsecured debts. It typically takes about three to six months to discharge eligible debts. When you file for Chapter 7, most types of wage garnishment will stop immediately. However, be aware that recent tax obligations and child support payments may not be discharged under this chapter.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to create a repayment plan to pay back debts over three to five years. Filing for Chapter 13 can also stop wage garnishment, and it may provide a way to catch up on missed payments over time. This type of bankruptcy could be a suitable option if you want to keep certain assets while repaying your debts.

Steps to File for Bankruptcy in Maryland

  1. Consult a Bankruptcy Attorney: Before filing, consult with a qualified bankruptcy attorney to discuss your situation and determine the best course of action for stopping wage garnishment.
  2. Complete Required Credit Counseling: Maryland law requires you to complete a credit counseling course within six months before filing for bankruptcy.
  3. Gather Financial Documents: Collect your financial records, including income, debts, expenses, and assets, which will be necessary for filing.
  4. File the Bankruptcy Petition: Once you have all documentation, your attorney will help you prepare and file your bankruptcy petition with the appropriate court.
  5. Notify Your Employer: After filing, notify your employer about the bankruptcy filing to ensure that they cease deductions from your wages.

Protecting Your Income

While bankruptcy provides protection from wage garnishment, it's vital to understand your rights. Maryland law limits the amount that can be garnished from your wages. Generally, creditors can garnish up to 25% of your disposable earnings or the amount that exceeds 30 times the federal minimum wage, whichever is less. Filing for bankruptcy can halt these deductions, allowing you to retain more of your income.

Conclusion

Bankruptcy can be a powerful tool for stopping wage garnishment in Maryland. Whether you choose Chapter 7 or Chapter 13, understanding the process and your options is crucial. Remember to seek professional advice to ensure you make informed decisions aligning with your financial goals.