Filing Bankruptcy to Prevent Against Wage Garnishment in Colorado

My chapter 7 and chapter 13 bankruptcy clients in Denver and other areas of Colorado often face a wage garnishment which can unexpectedly take a portion of a bankruptcy debtor’s wages. A personal bankruptcy can either prevent against an impending wage garnishment or halt an already ongoing wage garnishment. Federal law allows for creditors to otherwise garnish 25% of a debtor’s net (e.g. take home) wages.

However, the automatic stay provisions of the Bankruptcy Code immediately goes into effect the minute a bankruptcy petition is filed in Colorado. The automatic stay provisions require a creditor to cease any and all attempts to collect a debt, including wage garnishments. A creditor can even be found in contempt of court for knowing violations of the automatic stay provisions. I’ve even had a few cases where I’ve requested that the bankruptcy court compel a creditor to turn back over wages garnished after the filing.

A notable exception to the enforceability of the automatic stay provisions is a debt for child support, which can almost always be garnished and which cannot be discharged.