Automatic Stay and Garnishing Wages

Lesson: Automatic Stay and Garnishing Wages

In this lesson, Nick Palazzolo, CPA, demystifies the automatic stay and wage garnishment process. He begins by explaining what an automatic stay is, highlighting its role in halting collection efforts and legal actions against a debtor post-bankruptcy filing—with notable exceptions. Nick then breaks down the process of wage garnishment in a step-by-step manner, from obtaining a court judgment to the eventual termination of garnishment. He reassures with insights on the rights and protections available, even hinting at the role played by the Fair Debt Collection Practices Act in safeguarding individuals from aggressive creditors. Throughout the discussion, he provides a straightforward understanding of these complex topics with a focus on their legal and practical implications.

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Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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We're talking more about the concept of automatic stay, as well as introducing the idea of garnishing wages. Hopefully this is something you've never had to experience and you will continue to never have to experience. Automatic stay, well, when bankruptcy is filed, remember, an automatic stay does come into effect, which stops collection efforts and legal actions against the debtor, such as their wages being garnished. However, the automatic stay does not apply to criminal proceedings or spousal or child support obligations. That case is going to be, remember, support the children or support the spouse. They are going to continue to get their money. And criminal proceedings takes a whole different path. And we are not delving into that because this is not the criminal exam. This is the regulation exam. Now, garnishing an employee's wages. This is a legal process through which a portion of an individual's earnings is withheld by their employer to satisfy a debt owed by the employee. Think of it like where you see your FICA, Medicare tax being withheld, your federal income tax being withheld by the employer. So too does the employer withhold the money that you owe to someone else. Now, you might be thinking, that sounds kind of scary. Is that easy to have that happen? Well, let's talk about the overall process of how that works. Because there are, as we'll talk, about a lot of rights that you have as a potential debtor, where these creditors cannot come after you at your place of work and your employer can actually help protect you. And we'll dive into that more with the Fair Debt Collection Practices Act later on. But this is the process of being able to garnish an employee's wages. Again, so let's say a bank

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Bankruptcy, Debtors & Creditors, and Secured Transactions

Module: 3 Concepts, 46 Videos

Secured Transactions, Including the Rights, Duties and Liabilities of Debtors, Creditors and Guarantors Overview

2:55

Introduction to Secured Transactions

5:24

Debtors, Creditors, and Guarantors

3:10