Breaking Free: When Your Paycheck Is No Longer Your Own
Imagine this: It’s Friday, payday at last. You’ve worked hard all week, putting in extra hours, maybe even picking up an additional shift. You check your bank account, ready to pay bills and buy groceries, only to find a significant chunk of your earnings missing. This isn’t a bank error—it’s a wage garnishment, and it’s completely legal. For many Louisiana residents, this nightmare scenario is all too real.
When creditors take legal action to collect debts directly from your wages, the financial stress can become overwhelming. Bills pile up, necessities go unpurchased, and the cycle of debt deepens. But there’s a powerful legal tool that can break this cycle almost immediately: bankruptcy.
Understanding Wage Garnishment in Louisiana
Before discussing how bankruptcy stops garnishments, let’s clarify what wage garnishment actually is in Louisiana.
Wage garnishment is a legal procedure where a creditor obtains a court order requiring your employer to withhold a portion of your paycheck to satisfy a debt. In Louisiana, garnishments are governed by the Louisiana Code of Civil Procedure Articles 2411-2417, which establish the legal framework for how creditors can claim portions of your wages.
Under Louisiana law, creditors can generally garnish up to 25% of your disposable earnings (the amount remaining after mandatory deductions like taxes). This follows the federal limit established by the Consumer Credit Protection Act. However, this percentage may vary depending on the type of debt:
- For most consumer debts, credit cards, personal loans, and medical bills: up to 25% of disposable earnings
- For child support: up to 50-60% of disposable earnings
- For federal student loans in default: up to 15% of disposable earnings
- For federal tax debts: varies based on dependents and deduction rate
A wage garnishment begins when a creditor sues you, obtains a judgment, and then sends a garnishment order to your employer. Your employer is legally required to comply with this order and must begin withholding the specified amount from your paycheck and sending it directly to the creditor.
The Immediate Relief: How Bankruptcy’s Automatic Stay Works
When you file for bankruptcy in Louisiana, something remarkable happens: an “automatic stay” goes into effect the moment your case is filed. This stay is not just a legal technicality—it’s a powerful shield that immediately stops most collection activities, including wage garnishments.
The automatic stay is established by 11 U.S.C. § 362, and it’s one of the most immediate and significant benefits of filing bankruptcy. Here’s what happens:
- The moment your bankruptcy case is filed with the court, the automatic stay takes effect
- Your attorney notifies your employer and the garnishing creditor of the bankruptcy filing
- The garnishment must stop immediately—not next week, not at the end of the pay period, but right away
- Any attempt by a creditor to continue garnishing wages after being notified of the bankruptcy filing could result in sanctions against that creditor for violating the automatic stay
This immediate relief can be life-changing for many Louisiana families struggling with garnishments. One client described the feeling as “finally being able to breathe again” after months of financial suffocation.
Which Type of Bankruptcy Should You Choose to Stop Garnishments?
In Louisiana, individuals typically choose between Chapter 7 and Chapter 13 bankruptcy. Both can stop wage garnishments, but they work differently:
Chapter 7 Bankruptcy
Chapter 7, often called “liquidation bankruptcy,” is typically completed in 3-4 months. It works well for stopping garnishments when:
- You need immediate relief and want to eliminate most unsecured debts completely
- You don’t have significant non-exempt assets you’re trying to protect
- You meet the income requirements (you must pass the “means test” which compares your income to the Louisiana median income for your household size)
- You haven’t filed for Chapter 7 bankruptcy in the past 8 years
With Chapter 7, most unsecured debts that were causing the garnishment are discharged (eliminated) at the conclusion of your case, providing a fresh financial start.
Chapter 13 Bankruptcy
Chapter 13, known as “reorganization bankruptcy,” involves a 3-5 year repayment plan. It’s particularly helpful for stopping garnishments when:
- You have higher income and don’t qualify for Chapter 7
- You’re facing foreclosure or repossession and want to keep your home or car
- You have tax debts or other non-dischargeable debts causing the garnishment
- You have non-exempt assets you want to protect
- You’ve received a Chapter 7 discharge within the last 8 years
With Chapter 13, you make monthly payments to a trustee who distributes funds to your creditors according to your court-approved plan. While this doesn’t eliminate the debt immediately, it does stop the garnishment right away and gives you a structured, affordable way to address the underlying debt.
The Step-by-Step Process to Stop Garnishments Through Bankruptcy
If you’re facing a wage garnishment in Louisiana and considering bankruptcy as a solution, here’s what the process typically looks like:
1. Initial Consultation
Meet with a bankruptcy attorney who practices in Louisiana to discuss your specific situation. Bring documentation regarding:
- The garnishment order
- Pay stubs showing garnished wages
- The underlying debt causing the garnishment
- Information about your income, expenses, assets, and debts
2. Determine If You Need Emergency Filing
If the garnishment is causing immediate hardship, your attorney may recommend an emergency filing, also known as a “skeletal filing.” This allows you to file the minimum required paperwork to get the automatic stay in place immediately, with the remaining documentation to follow within 14 days.
3. Complete Credit Counseling
Before filing, you must complete a credit counseling course from an approved provider. This can usually be done online or by phone in as little as 90 minutes.
4. File Your Bankruptcy Petition
Your attorney will prepare and file your bankruptcy petition with the United States Bankruptcy Court for your district in Louisiana (Eastern, Middle, or Western District).
5. Notify Employers and Creditors
Once the bankruptcy is filed, your attorney will notify your employer and the garnishing creditor immediately, providing them with your case number as proof of filing.
6. Attend Required Meetings and Hearings
You’ll need to attend a Meeting of Creditors (also called a “341 meeting”) approximately 30-45 days after filing. Depending on your case, there may be other hearings you need to attend.
7. Complete Financial Management Course
Before receiving your discharge, you must complete a second course on financial management.
8. Receive Discharge
In a Chapter 7 case, you’ll typically receive your discharge 3-4 months after filing. In Chapter 13, you’ll receive the discharge after completing your repayment plan (3-5 years).
After the Garnishment Stops: What Happens Next?
Once your bankruptcy filing stops the garnishment, several things happen:
Employer Notification
Your employer will receive official notice to stop withholding funds from your paycheck. This typically happens very quickly after filing.
Recovering Recently Garnished Funds
In some cases, you may be able to recover money that was garnished shortly before your bankruptcy filing. Under bankruptcy law, certain garnishments that occurred within the 90 days prior to filing may be considered “preferential transfers” that the bankruptcy trustee can recover and potentially return to you.
Addressing the Underlying Debt
What happens to the debt that led to the garnishment depends on the type of bankruptcy you file:
- In Chapter 7: Most unsecured debts (like credit cards and medical bills) will be discharged, meaning you no longer have to pay them.
- In Chapter 13: The debt becomes part of your repayment plan, often at reduced amounts or interest rates.
Rebuilding Your Finances
With the garnishment stopped and a plan in place to address your debts, you can focus on rebuilding your finances. The bankruptcy will remain on your credit report for 7-10 years, but its impact diminishes over time, and many people begin rebuilding credit within 1-2 years after bankruptcy.
Limitations: When Bankruptcy Might Not Stop a Garnishment
While bankruptcy is powerful, it doesn’t stop all types of wage garnishments. In Louisiana, garnishments that may continue despite bankruptcy include:
- Child support and alimony obligations (the automatic stay doesn’t stop these garnishments)
- Certain tax debts (particularly recent tax obligations)
- Student loans (in most cases, unless you can prove “undue hardship”)
- Criminal fines and restitution
Additionally, the automatic stay is temporary. If your bankruptcy case is dismissed or if a creditor successfully moves the court for “relief from the automatic stay,” the garnishment could resume.
Key Takeaways
- Filing bankruptcy in Louisiana creates an automatic stay that immediately stops most wage garnishments
- Both Chapter 7 and Chapter 13 bankruptcy can stop garnishments, but they work differently and have different eligibility requirements
- Emergency filings are available when you need to stop a garnishment right away
- Some garnishments, particularly those for domestic support obligations, may continue despite bankruptcy
- Recently garnished wages (within 90 days before filing) may be recoverable in some situations
- The decision to file bankruptcy should be made carefully, with consideration of both short-term relief and long-term financial implications
Frequently Asked Questions
How quickly will my garnishment stop after filing bankruptcy?
The garnishment should stop immediately upon filing. Your attorney will notify your employer and the creditor of your bankruptcy filing, usually the same day or the next business day after filing. The automatic stay takes effect the moment your case is filed.
Will I get back money that was already garnished before I filed bankruptcy?
Possibly. If wages were garnished within 90 days before filing and the amount exceeds certain thresholds, the bankruptcy trustee may be able to recover these as “preferential transfers.” However, this isn’t automatic and depends on several factors specific to your case.
Can I choose which debts to include in my bankruptcy?
No. When you file bankruptcy, you must list all your debts. You cannot pick and choose which creditors to include. However, you can choose to voluntarily repay certain debts after bankruptcy if you wish.
Will my employer find out about my bankruptcy?
If you have a wage garnishment that stops because of bankruptcy, your employer will be notified of the bankruptcy filing. Otherwise, employers typically don’t receive direct notification unless they are creditors or you have wage orders as part of a Chapter 13 plan.
Can I file bankruptcy without an attorney?
While it’s legally possible to file “pro se” (without an attorney), it’s generally not advisable, particularly when wage garnishments are involved. Bankruptcy law is complex, and mistakes can lead to case dismissal or even the denial of your discharge. Most Louisiana bankruptcy attorneys offer free initial consultations.
How long after bankruptcy can I rebuild my credit?
Many people begin to rebuild their credit within 1-2 years after bankruptcy. Although the bankruptcy will remain on your credit report for 7-10 years, its impact diminishes over time, and many lenders have programs specifically for people who have recently completed bankruptcy.
Does bankruptcy stop tax garnishments?
It depends on the type and age of the tax debt. Bankruptcy’s automatic stay typically stops IRS garnishments temporarily, but whether the underlying tax debt can be discharged depends on several factors, including the age of the tax debt, whether returns were filed timely, and if there was any fraud involved.
Take Action Today
If you’re facing wage garnishment in Louisiana, time is of the essence. Each paycheck that’s garnished is money that could be helping you meet your essential needs or rebuild your financial future.
At E. Orum Young Law, we have helped thousands of Louisiana residents stop garnishments and regain control of their finances through bankruptcy. We understand both federal bankruptcy law and Louisiana’s specific statutes that affect your case.
Our attorneys can quickly determine if bankruptcy is the right solution for your situation and, if it is, can often file cases rapidly to stop garnishments as soon as possible.
Don’t let another paycheck be reduced by garnishment. Contact us today for a free case review to discuss your options. Our experienced attorneys are ready to help you take the first step toward financial freedom.
