Discovering that your employer is sending up to 25% of your salary directly to a creditor is devastating, especially when you live paycheck to paycheck. Bankruptcy's "automatic stay" stops this the same day you file.
What is Wage Garnishment?
Wage garnishment occurs when a creditor obtains a court order requiring your employer to deduct money directly from your paycheck before you receive it. In California, creditors can garnish up to 25% of your disposable earnings. Creditors who typically use this remedy: credit cards (after obtaining a judgment), personal loans, medical bills, the IRS, and the Franchise Tax Board.
The Automatic Stay: Immediate Stop
When you file bankruptcy, a "stay" automatically takes effect making it illegal for any creditor to continue the garnishment. Your employer must stop the deductions immediately upon notification.
What Happens to the Garnishment After Bankruptcy?
In Chapter 7: if the underlying debt is discharged (credit card, medical bills), the garnishment disappears permanently. In Chapter 13: the payment plan consolidates all your debts into one manageable monthly payment, and the garnishment is suspended during the plan.
An Important Exception
Garnishment for child support and alimony is NOT stopped by the automatic stay. These debts are specifically excluded from bankruptcy protection. If your garnishment is for these domestic debts, you need a different strategy, but if it's for credit card debt, loans, or medical bills, bankruptcy can return that 25% of your paycheck.