Bankruptcy can avoid lawsuits and wage garnishment

by | Jun 4, 2021 | Personal Bankruptcy |

All kinds of people face financial struggles. The reasons can involve poor financial choices, bad investments or matters beyond their control, such as losing a job or medical problems. It can create a snowball effect where the expenses grow to the point where a person can no longer service the debt. Soon, debt collectors start calling and leaving harassing messages. There may be threats of lawsuits or legal actions where they will garnish wages.

How it works in Florida

Wage garnishment in Florida occurs when the creditor gets a court judgment and then files a motion to deduct part of the individual’s paychecks until they pay the entire amount. There are some exemptions (such as head of household) to protect part of the income, and there are also limits on how much disposable income (net pay after taxes) they can garnish from the paycheck. The rule is generally 25% of disposable income.

Filing bankruptcy provides protection

Once an individual finds out that a creditor plans to seek a judgment, the smartest option may be to file bankruptcy. Bankruptcy law mandates that all collection activity (including calls, visits to the home, emails, texts, etc.) must stop once the creditor receives notice of a pending bankruptcy.