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With consumer debt being at an all-time high, creditors are aggressively attempting to collect debt. Creditors can collect debt through various means but one of the most effective methods is garnishing your wages. Having your wages garnished by a creditor makes an already bad financial situation worse. It can prevent you from having enough money to pay your bills and dig you into a deeper whole. At DebtPros, our bankruptcy lawyers will review your situation and provide you with all your options to help you get back on your feat.
Fortunately, there are ways to stop garnishments. Filing for bankruptcy can provide you with immediate relief. In this blog, we will discuss wage garnishment laws in Illinois and how filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can help.
Illinois’ wage garnishment laws
Illinois has its own set of laws governing wage garnishments called the Illinois Wage Assignment Act. These laws work in tandem with the federal Consumer Credit Protection Act. A wage garnishment or assignment is the legal process allowing a creditor to withhold money from your paycheck to pay back the creditor. The laws above set limitations on how much creditors can take.
Creditors cannot simply garnish your wages because you owe them money. To garnish wages, creditors must first obtain a judgement, with limited exceptions on federal student loan debt, child support debt, or tax debt. Obtaining a judgement requires the creditor to file a lawsuit against you. It is important to always appear in court if you are served a summons. If the judge determines that the lawsuit is valid and there are no defenses to the complaint, a judgement will be entered stating the amount of debt owed.
Next, for the creditor to have the right to withhold your wages, they must obtain a wage garnishment or assignment order. To do so, creditors must file a citation to discover assets to determine what assets you have and where you work. Determining that you have a w2 job prompts the creditor to seek a wage garnishment order. The creditor can then send this order to your employer to withhold a certain amount of money from your paycheck.
As stated above, withholding wages has its limitiations. In Illinois, only 15 percent of your gross income can be withheld or the amount of disposable earnings that remains after deducting the Illinois’ minimum wage. Additionally, there are also exemptions available to you. Exemptions are laws that shield your income or assets from creditors. Below are some common exemptions afforded to consumers:
- Head of household exemption – this exemption is for the person who is breadwinner in their household or supports dependents. If you qualify, you can protect a larger portion of your wages from creditors.
- Low income exemption – this exemption is to protect people with low incomes to allow them to have enough money to cover their necessary expenses. The exemption does not allow the person to have less than 45 times the state minimum wage as weekly pay. For example, if the minimum wage is $15.00 an hour, they cannot garnish your wages if your net income is less than $675.00.
Lastly, certain types of income are protected from creditors. Protecting income shields it from creditor garnishment orders. Some examples of income that are garnishment proof include:
- Social security disability
- Social security income
- SNAP (food stamps)
- Unemployment insurance benefits
- Most VA benefits
If your wages are being garnished or are about to be, it is important to understand your rights and options. Rather than search online for solutions, it is always best to speak with an expert. That is why you should call us as soon as possible to understand your rights. When you call DebtPros, you will speak with an experienced bankruptcy lawyer in Chicago who will thoroughly review your situation and advise you on your options.
Wage garnishments and bankruptcy
Contesting a wage garnishment order in state court is typically an uphill battle. However, there are other ways to stop wage assignment orders. The most immediate and effective way to stop wage garnishments is filing for either Chapter 7 or Chapter 13 bankruptcy. Filing for bankruptcy is a powerful financial tool that stops creditors from collecting money from you while eliminating your debt.
The bankruptcy code under title 11 of the United States Code is the uniform federal law governing bankruptcy cases. The underlying purpose of the bankruptcy code is to provide financial relief to consumers struggling to make ends meet. Filing a bankruptcy petition triggers a stay called the “automatic stay.” This stay immediately stops creditors from continuing or starting collection actions against you. For instance, creditors are prohibited from:
- Garnishing your wages
- Filing or continuing a lawsuit against you
- Harassing you for money
- Sending letters or emails demanding payment, and
- Seizing or repossessing your property
Stopping these collection activities serves several purposes. First, it provides you with breathing room from your creditors, allowing you to get your finances in order. Second, it forces the creditors to seek payment on debt through the bankruptcy process. The automatic stay is imposed in both Chapter 7 and Chapter 13 bankruptcy cases.
Chapter 7 bankruptcy is a type of bankruptcy where unexempt assets are liquidated or sold to pay your creditors. Rarely does a Chapter 7 bankruptcy end up in you losing your property due to exemptions. Exemptions are used to protect your property from creditors. To learn more about Chapter 7, please visit our Chapter 7 bankruptcy page.
With respect to garnishments, Chapter 7 will stop any future garnishments after you file. Money taken from your pay within the 90 days prior to filing may also be recoverable. Chapter 7 lasts four to six months. If you have no unexempt assets, Chapter 7 is likely your best option.
Chapter 13 bankruptcy, also known as reorganization bankruptcy, requires you to repay your creditors over a three to five-year period. The trustee does not sell any of your property in a Chapter 13. When the case is filed, a proposed plan is filed detailing how much you will be paying your creditors back and what your monthly payments will be. Chapter 13 is for individuals with disposable income or assets that they do not want to lose in a Chapter 7.
With respect to garnishments, the automatic stay will stop them after you file. However, the amount owed under the garnishment order would need to be repaid in your bankruptcy case. For more information on Chapter 13 bankruptcy, please visit our Chapter 13 page. At DebtPros, our bankruptcy lawyers in Chicago are here to help.
Call now to speak with a bankruptcy lawyer!
Understanding the intricacies of Illinois’ wage garnishment laws is crucial for individuals facing financial difficulties. Any reduction in income, no matter how small, can severely impact your ability to pay your bills or other necessary expenses. Filing for bankruptcy can help stop garnishments and eliminate your debt. To determine your best course of action, call DebtPros now at (312) 883-5422 for a free consultation! When you call our Chicago DebtPros office, you will speak with an experienced bankruptcy lawyer who will review your case and advise you on your best options.
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