When a creditor starts taking money directly out of your paycheck, it can feel like you’re losing control of your financial life overnight. For many people in Alabama, wage garnishment strikes when they’re already under tremendous stress—trying to recover from a job loss, medical bills, or other life-changing setbacks.
If you’re facing wage garnishment and worried about how you’ll keep up with rent, groceries, and basic expenses, it’s crucial to understand your legal options. In this blog, we’ll explain the basics of wage garnishments in Alabama and how an “automatic stay” through bankruptcy may be able to help.
If you have additional questions about the bankruptcy process in Alabama, reach out to experienced Birmingham bankruptcy attorney Steve Altmann at Nomberg Law for a free consultation.
What is the most they can garnish from your paycheck?
One of the most difficult forms of debt collection to overcome is wage garnishment. Creditors, such as credit cards and medical bill collectors, can often take up to 25% of your net pay.
Debts owed to taxing authorities, such as the IRS, may result in even more being deducted. If you are living paycheck to paycheck, a wage garnishment can ruin your family budget.
What are the rules for wage garnishments in Alabama?
In Alabama, the wage garnishment process works like this:
- The creditor will file a Process of Garnishment with the court where it has obtained a judgment against you.
- The court will then serve the Process of Garnishment on your employer or your local bank, depending on where the creditor believes it can get the most money.
- After your employer or bank is served, you will receive notice of the garnishment, giving you an opportunity within 30 days to claim an exemption or file an objection to the garnishment with the court.
- Your employer is required to start deducting up to 25% from your wages and send the money to the court.
- The Clerk of Court holds the money until the funds are condemned by the creditor.
- The creditor must file a Motion to Condemn the funds before they are paid from the court to the creditor.
This is where bankruptcy can provide you the relief that you so desperately need through something called an “automatic stay.”
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Does an automatic stay stop garnishment?
Yes, the bankruptcy code provides a powerful tool called the “automatic stay,” which stops wage garnishment cold in its tracks.
Once a bankruptcy petition is filed, the automatic stay goes into effect and requires creditors to cease any further collection efforts on the debt.
How long does it take to get an automatic stay?
The stay takes effect as soon as a Voluntary Petition is filed. When filed, a notice is sent to all creditors, informing them of the stay. The notice is usually sent out within a day or two of filing.
Rather than waiting, a copy of the notice can usually be obtained from the court docket on the date of filing. It can then be hand-delivered, faxed, or electronically delivered to the creditor.
Since an employee’s wages are being garnished, a copy should go to the employer’s HR department. The sooner this is done, the sooner the garnishment can be stopped.
Can I get my money back from the court during an automatic stay?
If you file bankruptcy before the funds are condemned by the creditor, the Clerk of Court will return the money to your employer, who will pay the money back to you. This is why the timing of your bankruptcy is so important.
Once the funds are paid to the creditor, the funds are no longer property that you can retrieve just by filing for bankruptcy protection.
If the creditor attempts to garnish your bank account, the funds in the account will be frozen on the date that the garnishment is received by the bank. A garnishment sent to your bank is considered a “one-time” garnishment, meaning it does not automatically continue like wage garnishment.
Once the money is sent from the bank to the court, the bank is no longer obligated to continue sending money to the court. The creditor would need to serve another Process of Garnishment on your bank to have it freeze any future funds that you deposit in the bank account.
Filing for bankruptcy will stop the garnishment and force the bank to release the funds in the bank account to you.
When won’t an automatic stay stop wage garnishment?
Some debts can’t be discharged through bankruptcy. Because of this, an automatic stay does not apply to domestic support obligations, such as child support and alimony payments. If a wage withholding order is in effect for either of these obligations, the bankruptcy court will not stay the order, and the support will continue to be deducted from your wages.
Additionally, if you had two previous bankruptcy cases dismissed within a year of commencing the present case, the stay will not be automatic. Thus, garnishment could continue.
However, you may file a motion with the court to impose the automatic stay if you can prove that your current bankruptcy case was filed in good faith.
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Facing wage garnishments and considering bankruptcy in Alabama?
If wage garnishment is threatening your family’s stability, you don’t have to navigate the pressure and uncertainty on your own. A bankruptcy attorney can step in quickly, explain your options, and help you put an immediate stop to further financial harm.
At Nomberg Law Firm, experienced Birmingham bankruptcy attorney Steven Altmann has spent more than 2 decades helping Alabama individuals and business owners protect their income, preserve their assets, and regain control during some of the most stressful moments of their lives.
If mounting debt is affecting your family’s well-being, now is the time to get trusted legal guidance. Schedule a free consultation with bankruptcy attorney Steven Altmann at Nomberg Law Firm today.
Steven D. Altmann is a seasoned bankruptcy lawyer with more than 25 years of experience. He holds an AV rating from Martindale-Hubbell and has been recognized as a Super Lawyer and a Top Attorney by Birmingham Magazine for his work in Bankruptcy Law.
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