The reasons to declare bankruptcy varies from person to person, but many people cite the punitive measures taken by creditors as a prime issue in their decision. It's easy to see why – creditors can make those who don't pay their bills on time pay in many other ways. The phone calls and letters are just the start for some who are in over their heads in debt and sinking lower each day. Knowing when you've reached the right time to file your chapter 7 paperwork can be tricky, but if you don't act quickly enough things can get much worse in a hurry. Read on to learn more about how to put a stop to the punitive actions of debt collectors, particularly wage garnishment and liens.
An Attempt to Collect a Debt
The above words often accompany statements, bills, collection actions, and more. When your bills have gone unpaid for a certain length of time, the creditors and the collection agencies can take legal action against you. You will be provided with notice of the court date, but few people in bad financial shape can afford to hire an attorney to help them at that point. In fact, there is little that can be done when things have reached this stage and usually the creditor walks away from the courtroom with a judgment in hand. This judgment gives them the right to take actions that might end up causing you untold problems, unless you act quickly.
Your Property is at Risk
The court's ruling gives creditors the right to impose several punitive measures, such as:
- Liens – When a lien is in place on your property, you cannot sell or use it as collateral for any reason until the debt is paid.
- Wage garnishment – This form of debt collection comes in the form of a legal order that is served upon your employers and it compels them to remove a certain percentage of your pay from your paycheck to pay the debt.
Can Wage Garnishment be Stopped?
Both wage garnishment and liens can be lifted with a bankruptcy filing, with two exceptions. If you owe the IRS or child support (and spousal support in some cases), liens and garnishments will stay in place until the debt is paid. For other debts, the punitive actions will come to an immediate halt. The result is more take-home pay and the ability to sell or get a loan on real property. Not only does the lien and garnishment disappear, but the debt that prompted such measures goes away as well.
Don't wait for your creditors to take you to court because you will still be responsible for paying the court costs regardless of a bankruptcy filing. Speak to a bankruptcy attorney, such as Greg Dunn Bankruptcy Attorney, to learn more about the debt relief possible through a chapter 7 filing.