Getting behind on financial obligations happens to many people, including Texas residents. These issues often arise out of some sort of crisis that drains financial resources such as an illness, an injury or job loss, among other things. When this happens, some creditors may attempt to get the money they are owed through a bank levy or a garnishment, both of which could be stopped, at least temporarily, through a Chapter 7 bankruptcy.
Even though both take the money of a Texas resident in financial trouble, there are differences between a bank levy and a garnishment. A bank levy authorizes a creditor to take money directly out of a consumer’s bank account. Other than the fact that money comes out of this account to pay a debt without the consumer’s permission, this debt collection method freezes the account until the debt is satisfied. This means that the account holder will not have the right to take money out of the account during this time.
A garnishment involves an employer withholding a specified amount of money from an individual’s wages that is then sent to the creditor each pay period. Even though the state and federal governments restrict the amount of money that may come out of a paycheck for a garnishment, it could still substantially impact a person’s ability to live and pay other financial obligations. The sooner a consumer begins searching for debt relief options to resolve the issue, the better off he or she will be.
Filing a Chapter 7 bankruptcy could stop bank levies and garnishments during the proceedings. This could provide a consumer with the time needed to work out his or her financial situation so that these debt collection methods are no longer needed. In some cases, the debt attached to the levy or garnishment could be discharged in the bankruptcy, which would also provide much-needed relief to the consumer.