Often called "straight bankruptcy," Chapter 7 stops creditor activity and can wipe out credit card debt, medical bills, and remaining balances after a repossession or foreclosure. If your tax debt is over three years old and you filed the returns at least two years ago, some federal and state income taxes may also be discharged.

You can protect up to $175,000 in home equity. From filing to discharge, the process usually takes three to four months. We will only recommend bankruptcy if it is truly in your best interest. You may just need debt negotiation. Come in for a free consultation and financial check-up. We have 20 years of experience. Know your options.

Chapter 13 is often used by people behind on their mortgage. It allows you to catch up on missed payments over 36 to 60 months and avoid foreclosure. It can also remove a completely underwater second mortgage. If your car is worth less than you owe, you may be able to reduce the debt to the car’s actual value. Even if your tax debt can’t be discharged, you can still pay it through a Chapter 13 plan, often with lower monthly payments than an IRS installment agreement.

Wage garnishment is when a creditor takes part of your paycheck to collect on a debt. Most creditors must first get a court judgment, but government agencies can garnish wages for unpaid taxes without one. A sheriff serves paperwork to your employer, who then withholds part of your wages and sends it to the creditor.

For regular debts, garnishment is usually limited to 25 percent of your pay after taxes and mandatory deductions. For debts like unpaid child support, garnishments can be as high as 60 percent. Garnishment cannot reduce your weekly pay below 30 times the federal hourly minimum wage. Garnishments continue until the full debt is paid.

There are three main ways to stop wage garnishment:

• Pay the debt in full or settle for an amount the creditor agrees to accept as full payment.
• File an exemption claim with the sheriff by showing you need your entire paycheck to cover basic living expenses. If the creditor objects, a judge decides if garnishment continues. Until then, garnishment stays in effect.
• File for bankruptcy. When you file, notify the sheriff and creditor. The sheriff then orders your employer to stop withholding wages. If the debt is discharged, garnishment won’t restart.

Some debts, like child support, may not be discharged. In those cases, garnishment can resume after your case ends or earlier if the court allows it. Bank accounts can also be garnished. Bankruptcy usually stops those garnishments too, including those by the IRS and student loan collectors. After filing, you must file a Notice of Stay with the court and notify the creditor, their lawyer, and the garnishing agency.

Getting garnished money returned is difficult, especially if the creditor already has it. It may be possible by filing a motion with the bankruptcy court requesting the return of funds. This process is complex and often requires a bankruptcy attorney’s help. In short, if you qualify, filing bankruptcy can stop garnishments and erase many unsecured debts, giving you a fresh financial start.