I currently have a wage garnishment in place set by the IRS. It is EXTREMELY high, $750 per pay period, every two weeks!! I cannot afford this and owe them way too much. I am considering filing for bankruptcy but prior to, would like to know if the garnishment will go away once I file. If so, how long after I file will, the garnishment stop? The taxes owed are three years or older.
Chapter 7 will temporarily stop the garnishment, However, you will need speak with an experienced bankruptcy attorney to determine if the tax can be discharged. Alternatively, you might be eligible for a Chapter 13 payment plan and potentially lower the amount that you pay.
The garnishment would start as soon as you file the case. Practically speaking, you want to file in enough time to inform your payroll department so they can stop the garnishment.
However, be very careful with assuming the taxes are dischargeable. Timing is very important and there are lots of dangers in this area. In addition to needing to have been due at least three years ago, there are requirements for filing of the taxes, for recent assessments, and if the IRS has filed a lien against you that could affect things as well. You don't want to jump into a chapter 7 cases just to know you'll be back in the garnishment four months later when the case ends. There could be timing issues that help you in a chapter 7, or reasons to file a chapter 13.
The simple answer is the garnishment will stop as soon as you file and inform payroll. The more important answer is to be careful with this area and seek a consultation, particularly as it appears there are a large amount of back taxes due.
Hope this helps!
The best advice we can give you is to consult with an experienced, local bankruptcy attorney who can review your situation in more detail and advise you based on the results of that conversation.
As the other attorneys have stated, filing bankruptcy will stop the garnishment right away and there will be no garnishment for the duration of your bankruptcy.
You may be able to eliminate the tax debt if it is older than 3 years, its personal income tax, and you filed your tax returns on time. This is assuming the IRS does not have a secured lien against you. Make sure to consult an experienced bankruptcy attorney so they can review your tax documents to advise you whether or not the tax debt will be eliminated and what chapter - chapter 7 or chapter 13 would be best for your situation.
It will temporarily stop the wage assignment, but it may resume after your BK is closed if the taxes are not discharged. There are many factors to consider when determining the dischargability taxes. You need to consult with an experienced BK attorney. There's too much to discuss to get any good offhand advice here.
Rob
Yes. The automatic stay enacted when you file your bankruptcy case protects you from all debt collection efforts (including garnishment) while your case moves through the court system.
