Those struggling to balance their budgets sometimes reach a point of despair where they simply stop trying because they’ve fallen too far behind. Every time the phone rings, they shudder, and they don’t even want to open their mail anymore.
They tell themselves that there is no point in making a minimum payment to their credit card every month because the balance remains over the limit even though they send hundreds of dollars. It can briefly bring relief to stop engaging with aggressive collectors when someone realizes they can’t make all the payments that they are obligated to send. Unfortunately, those who stop communicating with creditors or sending payments can anticipate increasingly aggressive collection efforts.
Missed payments put someone’s wages at risk
Banks and other creditors may take people to court in an attempt to collect on bad debt if they have fallen too far behind on payments. A judge can potentially garnish someone’s wages, forcing them to give a portion of their weekly income directly to a creditor.
Those facing creditor lawsuits frequently file for personal bankruptcy as a means of avoiding wage garnishment. The day that someone files for bankruptcy, the courts extend an automatic stay until they finalize the bankruptcy filing, so creditors typically have to cease any collection activity. That will include the dismissal of any pending lawsuits that could lead to wage garnishment if they were successful.
Although bankruptcy is very effective at preventing wage garnishment, it will not always eliminate wage garnishment. Those pursuing a Chapter 13 filing may be in a good position to eliminate a garnishment as they establish a repayment plan, but those pursuing a Chapter 7 bankruptcy may still be subject to the garnishment even after their discharge in some cases.
Proactive responses can benefit those who are struggling financially
Rather than giving into despair and letting the situation worse, those who are unable to meet their financial obligations will typically benefit from taking control of their financial circumstances. The decision to file for personal bankruptcy can protect someone from collection activity and give them an opportunity to minimize their ongoing financial obligations. Avoiding wage garnishments is one reason why those struggling to cover their debts may choose to file for personal bankruptcy with the assistance of a legal professional.