Bankruptcy Stops Wage GarnishmentThe minute a bankruptcy cases filed,an injunction called the automatic stay is issued, which prohibits creditors from trying to collect on debts that were included in the bankruptcy. The Ninth Circuit Court of Appeals has called the automatic stay “one of the most important protections in bankruptcy law.” The automatic stay is self-executing, effective upon the filing of the bankruptcy case and requires that all collection calls, lawsuits and garnishments must stop immediately. Creditors who continue with collection efforts face stiff fines and penalties from the bankruptcy court. Section 362(k) of the Bankruptcy Code provides:
An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.
Reference National Bankruptcy Forum
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