As debt mounts, you know there is no way you are going to pay it all off on your own. It’s just too much. You do have a job, and you are thankful for that, but it is not as if you’re making $100,000 per year. You and your family are living paycheck to paycheck.
In response, your creditors ask to have your wages garnished. They win the right to do so, and money starts disappearing from your paychecks. There may seem to be nothing you can do, as your employer legally must take the money out before giving you the check.
At this point, you start wondering if it would just be better to declare bankruptcy. Are there advantages to using bankruptcy, rather than waiting until the garnishments pay for all of the outstanding debt?
High garnishments
One thing to remember is that garnishments could be fairly high. In some cases, you could lose roughly half of your paycheck. It’s not just a few dollars here and there. As long as the garnishments continue — and it could be years, depending on what you owe — your standard of living may drop considerably.
Lower Chapter 13 payments
In cases like that, your payments under a Chapter 13 bankruptcy filing may be lower than those ordered under the garnishment ruling. People often assume Chapter 13 and wage garnishments are very similar, and they are in the sense that you lose money every month, but that does not mean they always have the same impact on your life.
Payment schedules
Another thing to remember is that Chapter 13 bankruptcy often lasts for three to five years. That’s part of the reason you can get such low monthly payments. When you have five years to take care of the debt, it may not take all that much from each paycheck to do it.
This is often why people prefer to use Chapter 13, especially over higher garnishments. They know they can pay back the debt eventually. They just can’t do it at once. Chapter 13 could spread out the total term of the payments so that they become affordable again.
Chapter 7
Another option is Chapter 7. It comes with one huge perk: No monthly payments at all. Instead, you just liquidate the non-exempt assets that you already own and use them to pay off as much of the debt as that allows, with what remains often getting forgiven.
Your options
Wage garnishments keep taking your paychecks. You keep growing more and more tired of it. Make sure you know all of your legal options. As you can see, you do not always just have to accept these seemingly endless garnishments.
