Few things cause a more immediate sinking feeling than opening your paycheck and realizing a creditor has siphoned away a massive chunk of your hard-earned money. In Colorado, when debt goes unpaid, creditors can take legal action to garnish up to 25% of your disposable income. If you are already struggling to cover basic living expenses in Aurora and the surrounding areas, a wage garnishment can push a difficult financial situation into a full-blown crisis.
Fortunately, you have powerful legal tools at your disposal to put an immediate end to the financial drain.
The Power of the Automatic Stay
The moment you file for bankruptcy, a federal injunction known as the “automatic stay” goes into effect. This legal barrier mandates that almost all creditors and collection agencies must cease collection efforts immediately. This means:
- Wage garnishments must stop.
- Foreclosure proceedings are paused.
- Harassing collection calls and letters are halted.
- Bank levies are frozen.
Chapter 7 vs. Chapter 13 for Garnishment
Depending on your unique financial situation, the path to stopping a garnishment will look different:
- Chapter 7 Bankruptcy: Often referred to as a “fresh start” bankruptcy, Chapter 7 can discharge most unsecured debts, such as credit cards, medical bills, and personal loans, eliminating the underlying debt that caused the garnishment in the first place.
- Chapter 13 Bankruptcy: If you have regular income but have fallen behind on secured debts, Chapter 13 allows you to consolidate your debts into a manageable 3- to 5-year repayment plan. The garnishment stops immediately, and you pay back a portion of what you owe under the protection of the bankruptcy court.
Ignoring a looming lawsuit or an active garnishment will only cost you more money. Taking swift action allows you to regain control of your paycheck. At Consumer Law Pro PC, we focus on helping Colorado residents navigate Chapter 7 and Chapter 13 filings efficiently so they can get back on their feet. If you are worried about a potential garnishment or are currently losing a portion of your wages, reach out for a consultation today to explore your debt relief options.
