One of the most potent debt collection tools available to creditors in Kentucky and other states is a wage garnishment. A properly executed garnishment allows a creditor to collect a portion of the debtor’s wages directly from the debtor’s employer. The provisions of Chapter 13 of the United States Bankruptcy Act provide a significant protection against garnishments after a petition for personal bankruptcy is filed.
The most powerful protection is the “automatic stay,” a portion of the Bankruptcy Act that stops all collection actions against the debtor, including garnishment proceedings, at the moment that the bankruptcy petition is filed with the court. The act of filing the petition – and nothing more – is effective to prevent creditors from pursuing their collection actions. Consequently, the garnishment process is automatically halted when the bankruptcy petition is filed. Creditors are also prohibited from making other efforts to collect on the debt, including phone calls and use of the mails.
The debtor is responsible for providing a list of creditors and their claims to the clerk of the bankruptcy court. Upon filing of the petition, the bankruptcy clerk will provide notice to each creditor of the beginning of the bankruptcy proceeding and the effective date of the automatic stay. Once this notice has been given, creditors may not initiate or continue proceeding to collect their debts, including garnishment proceedings.
The automatic stay is a useful protection for persons overburdened with debt. However, choosing the type of bankruptcy proceeding can be complex, depending upon the debtor’s particular financial situation. Anyone contemplating seeking protection of the bankruptcy law may wish to consult a lawyer who is knowledgeable about bankruptcy for advice about whether to proceed under Chapter 7 or Chapter 13 and the potential effect of bankruptcy on a person’s credit rating and ability to borrow money.
Source: United States Courts, “Chapter 13 – Bankruptcy Basics: How Chapter 13 Works,” accessed on April 29, 2017
