Can Bankruptcy Stop a Wage Garnishment in Virginia?

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Can bankruptcy stop a wage garnishment in Virginia? In most cases involving ordinary consumer debt, filing Chapter 7 or Chapter 13 triggers the automatic stay and stops an active wage garnishment, along with most related collection lawsuits and other efforts to collect pre-bankruptcy debts.

Timing matters. If you have already received a garnishment summons, have a court date coming up, or money is currently being withheld from your paycheck, it is important to determine exactly where the collection process stands before filing.

What Happens to a Wage Garnishment When You File Bankruptcy?

When a bankruptcy case is filed, the automatic stay generally prohibits creditors from continuing collection of pre-bankruptcy debts. That normally includes an existing wage garnishment.

Once we file a bankruptcy case for a client who has an active garnishment, we notify the creditor, the creditor’s attorney, the employer or other garnishee when appropriate, and the court where the garnishment is pending. The goal is to stop additional money from being withheld as quickly as possible.

The automatic stay applies in both Chapter 7 and Chapter 13, although there are exceptions to the stay and special rules for certain types of debts.

How Much of Your Paycheck Can Be Garnished in Virginia?

For most ordinary consumer debts, Virginia law limits the amount that can be taken from a worker’s disposable earnings. In general, the amount garnished cannot exceed 25% of disposable earnings, and additional protections apply to ensure that a certain minimum amount of earnings remains available to the employee. Different rules can apply to obligations such as child support, taxes, and certain other debts.

Even when the amount being withheld is legally permitted, losing part of every paycheck can make an already difficult financial situation much worse. Bankruptcy may stop the garnishment and address the underlying debt rather than requiring the debtor to continue dealing with one garnishment after another.

Can You Get Back Money That Has Already Been Garnished?

Usually yes, but not always.

The fact that a bankruptcy case is filed does not automatically mean that every dollar previously withheld from your paycheck must be returned.

The answer may depend on where the money is when the bankruptcy case is filed. Money that has already been paid over to the creditor can present a different issue from money that an employer or court is still holding. Exemptions, the timing of the garnishment, and other bankruptcy rules can also affect whether withheld money can be recovered.

For that reason, if money is actively being taken from your wages, it is helpful to contact us before the next garnishment date whenever possible.

What Is a Warrant in Debt in Virginia?

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A Warrant in Debt is the form commonly used in Virginia General District Court when a creditor files a civil claim seeking payment of money. It tells the defendant when and where to appear in court and states the amount the creditor claims is owed.

Credit card companies, debt buyers, medical creditors, lenders, landlords, and other creditors may use Warrants in Debt to obtain judgments against consumers.

If the creditor obtains a judgment, it may then pursue additional collection remedies, which can include wage garnishment, bank account garnishment, or liens against property.

Does Bankruptcy Stop a Pending Warrant in Debt or Lawsuit?

In most cases involving an ordinary debt, yes. Filing bankruptcy generally stays the continuation of a lawsuit seeking to collect a debt that arose before the bankruptcy filing.

If you have an upcoming court date, however, do not simply assume that you can ignore it after filing bankruptcy. We notify the state court and the creditor of the bankruptcy filing and determine whether anything further needs to be done in the pending case.

There are also situations in which a lawsuit may involve claims or parties that are not fully affected by the bankruptcy stay. The safest approach is to make sure your bankruptcy attorney knows about every pending lawsuit and court date.

What Happens to a Judgment After Bankruptcy?

A bankruptcy discharge can eliminate a debtor’s personal liability for many types of judgment debts. That means the creditor can no longer pursue the debtor personally to collect a discharged debt.

A judgment and a judgment lien, however, are not always the same thing.

If a creditor obtained and docketed a judgment before bankruptcy, the judgment may have created a lien against real estate owned by the debtor. Bankruptcy may discharge the underlying personal debt without automatically removing every lien associated with that judgment.

In appropriate cases, bankruptcy law may allow a debtor to avoid a judgment lien that interferes with property the debtor is entitled to exempt. We review existing judgments and liens as part of determining what additional action, if any, should be taken in the bankruptcy case.

What About a Garnishment of a Bank Account?

Bank account garnishments are also commonly used to collect judgments in Virginia. A creditor may serve a garnishment on a financial institution and cause money in the debtor’s account to be held.

Virginia law protects certain categories of money from garnishment, and debtors receive information about potential exemptions and how to claim them.

A bankruptcy filing can generally stop continued collection activity, but whether money already frozen in a bank account will be released depends on the circumstances. As with wage garnishments, the timing of the bankruptcy filing can matter significantly.

If your bank account has already been frozen, tell your bankruptcy attorney immediately.

Chapter 7 vs. Chapter 13 When You Are Being Garnished

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Both Chapter 7 and Chapter 13 generally trigger the automatic stay when the case is filed and can therefore stop most ordinary garnishments and collection lawsuits.

Chapter 7 may be appropriate when the debtor qualifies and the underlying debt can be discharged. Once the case is successfully completed, the creditor generally cannot resume collection of a discharged debt.

Chapter 13 also stops collection and allows the debtor to address debts through a court-supervised repayment plan. Chapter 13 can be particularly useful when the debtor also needs to catch up on a mortgage, protect a vehicle, pay priority tax debt, or address other obligations that require a longer-term repayment strategy.

Which chapter makes sense depends on much more than the existence of a garnishment.

Do You Still Need to Go to Court After Filing Bankruptcy?

Often, a state-court collection hearing will no longer need to proceed against the debtor once the bankruptcy case has been filed and the court and creditor have received notice.

But do not skip a court date solely because you intend to file bankruptcy.

If the bankruptcy has not actually been filed, there is no bankruptcy stay. And even after filing, there may be circumstances in which further action or an appearance is appropriate.

If you have a Warrant in Debt, garnishment hearing, or other court date coming up, give us the court paperwork so we can review the case and make sure the proper parties receive notice.

Facing a Garnishment or Debt Lawsuit in Richmond?

If you are wondering whether bankruptcy can stop a wage garnishment in Virginia, the answer is often yes—but the sooner the situation is addressed, the more options may be available.

Kane & Papa represents individuals throughout the Richmond area in Chapter 7 and Chapter 13 bankruptcy cases. If your wages are being garnished, your bank account has been frozen, you have received a Warrant in Debt, or a creditor has obtained a judgment against you, contact us so we can review the collection action and explain how bankruptcy may affect it.