Using Bankruptcy to Stop Debt Collections in St. Charles, MO

When companies are owed money they resort to using a variety of debt collection tactics to get accounts paid in full, for instance, one of the methods used is wage garnishment. A person subjected to this legal maneuver should contact a lawyer to discuss the option of filing for bankruptcy to stop this and other debt collections St. Charles, MO tactics.

About Garnishments

A wage or bank garnishment involves the creditor obtaining a court order to take part of the debtor’s paycheck or some money from the person’s bank account to pay the outstanding debt. In Missouri, the creditor can garnish:

* 25 percent of the person’s paycheck, or
* 10 percent of the person’s paycheck if the individual is head of household, or
* 30 times the hourly minimum wage

Whichever formula results in the least amount of money taken from the individual is what the credit can use to calculate how much to garnish. However, the creditor can take up to 60 percent of the person’s income if it is collecting child support, and the Department of Education can garnish up to 15 percent of the person’s wages to pay for past due student loans.

How Bankruptcy Stops Garnishments

Filing bankruptcy stops wage and bank garnishments in two ways. First, an automatic stays falls in place that stops all debt collections in St. Charles, MO, meaning that a creditor must end the garnishment as soon as it is notified of the debtor’s bankruptcy petition.

Second, bankruptcy wipes out the person’s debt: once the individual receives a discharge from the bankruptcy court, he or she won’t have to make any more payments on the bill and the creditor cannot continue pursuing payment. Be aware, however, that some debts such as student loans are immune to bankruptcy and will continue to be owed after the case ends.

While filing bankruptcy is an effective way to end debt collections in St. Charles, MO by creditors, it can be challenging managing this type of case. It’s best to consult with an attorney such as Van Dillen & Flood P.C. for assistance with filing the correct paperwork and handling any creditors who fail to stop garnishing.

 

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