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According to the North Carolina Department of Labor (NCDOL), your wages can be garnished by a creditor in North Carolina if you owe certain types of debts, such as student loans, child support, alimony, and taxes. However, a North Carolina-based creditor cannot garnish your wages if you owe credit card debts, car loans, or other types of debt.
What Is Wage Garnishment?
Wage garnishment occurs when your employer keeps part of your regular wages and pays them directly to a creditor to whom you owe money. A creditor may ask a court to grant their request to garnish your wages.
While creditors in North Carolina can only garnish your wages under specific circumstances—for example, if you have not been paying court-ordered alimony—creditors in other states could be bound by different rules. For example:
- You live in North Carolina, where your wages cannot be garnished based on credit card debt.
- You previously lived in a state that allows wage garnishment based on credit card debt.
- If a valid request for wage garnishment was made to a court in this other state, your employer may be directed to garnish your wages by this out-of-state court.
If you have any doubts about your rights regarding wage garnishment, a bankruptcy attorney in your area can assist you.
How to Avoid a Wage Garnishment
You work hard for your salary, so it is understandable to feel anger and frustration when your wages are garnished or are about to be. Fortunately, you have options. One is to consult a bankruptcy lawyer who can explain your legal rights and obligations under North Carolina law.
If creditors are garnishing your wages, you may have the right to:
- Renegotiate the terms of your loan: Some creditors may be open to giving you more time or better terms if it means you can pay back all that you owe. But, again, your attorney can do all the negotiating for you.
- File for bankruptcy: As soon as you declare bankruptcy, your creditors must stop trying to get money from you. This means wage garnishment would stop, and you would have some breathing room to seek a fresh start.
- Seek credit counseling: As the Consumer Financial Protection Bureau (CFPB) explains, credit counselors help people to restructure their debts and finances. Many of them offer their services for free or at a low cost.
Of these options, bankruptcy is the most “extreme,” but it may be the best option for those who have already tried the alternatives or have considerable debt.
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Filing Bankruptcy in North Carolina
If you are struggling financially and do not see how you can ever pay back what you owe, it may be time to talk to a bankruptcy lawyer.
Remember that bankruptcy is not a “miracle cure” that will absolve you of all debts. According to the U.S. Courts, certain types of debt cannot be discharged, including several of the same types of debts that creditors can garnish your wages for in North Carolina. These include:
- Taxes
- Child support
- Alimony
Other debts that cannot be discharged under bankruptcy include any personal injury damages or government fines you have been ordered to pay.
That said, filing bankruptcy can still help you, even if some or all of your debt is not discharged as a result. While it is not something anyone wants to go through, bankruptcy can:
- Reduce what you have to pay
- Give you additional time to come up with a repayment plan
- End wage garnishment, the threat of foreclosure or eviction, and other types of harassment
- Allow you to start over without worrying about excessive debt
There are Multiple Types of Bankruptcy
Depending on who you are and how you are filing, you may have the option of selecting which type of bankruptcy is right for you. Your attorney can explain the differences between each type of bankruptcy and the pros and cons of each.
If you are in a position to have your wages garnished, then you may benefit from filing Chapter 7 bankruptcy. Chapter 7 allows you to:
- Discharge all debts (with the exceptions noted above)
- Keep all of your assets
- Only risk liquidation off non-exempt assets (most people do not have non-exempt assets)
- Avoid having to submit a repayment plan, which other bankruptcy chapters require you to do
Again, the types of bankruptcy available to you depend on your situation.
Our Bankruptcy Lawyers Can Help You Deal with Your Creditors
Farmer & Morris Law, PLLC understands how stressful it is to suffer through financial hardship and that dealing with creditors only adds to your burden. To learn more about when a creditor can garnish your wages in North Carolina—and what you can do to stop it—call our firm for a free case review.
