When you default on a debt, the court may order your employer to withhold a certain percentage of your paycheck to repay the debt. This is called “garnishment.” For example, the IRS can garnish your wages for unpaid taxes.
There are a few things to keep in mind when considering bankruptcy to stop wage garnishment. First, understand that there are different types of bankruptcy, each with its own rules. For example, chapter 7 bankruptcy may not stop wage garnishment for past-due child support or alimony.
Wage garnishment: how does it work?

Wage garnishment is a way creditors can collect on debts that are in default. When you don’t respond to creditor attempts to order, the debt is sent to debt collectors. They have limited time to get the money you owe before it falls off your credit report. Ignoring the debt collector could lead to wage garnishment, where they take what you owe directly from your paycheck.
To garnish your wages, creditors must file a lawsuit. A charge is then sent to your employer by the judge ruling in the debt collector’s favor, which instructs them to hold back a portion of your paycheck to satisfy the debt. The withheld money is then sent directly to the creditor by your employer.
The amount of money that can be legally taken from your paycheck each week (via garnishment) is limited by both state and federal law. The maximum amount that can be taken is whichever is less: either 25 percent of your disposable income (what’s left after mandatory deductions such as taxes and health insurance premiums)
Unemployment benefits can be affected by wage garnishment?

Some benefits, like Social Security or Federal Student Aid, are usually exempt from wage garnishments. But child support, taxes, or student loans can still garnish your wages.
The laws governing garnishment vary from state to state, so the protections available depend on where you live. For example, some states have laws preventing stimulus checks from being garnished.
If unemployment benefits can be garnished, when can they be garnished?
Although unemployment benefits are typically exempt from garnishment, there are a few exceptions where your benefits may be impacted. In these cases, the creditor usually does not need to obtain a court order to garnish your benefits.
Support for children or spouses
Losing employment does not mean parents are exempt from paying child support. Unemployment benefits can be garnished to cover both past-due and ongoing child support payments. However, the process for doing this may vary from state to state.
Taxes
Unemployment benefits may be at risk in some states for those who owe back taxes. In these cases, the state may garnish a portion of the individual’s benefits to recoup what is owed. Each state has different laws addressing this issue. For example, unemployment benefits may be deducted each week for unpaid taxes in California.
Debt from student loans
With student loans, up to 15 percent of your disposable income may be garnished until the debt is repaid. The government does not need a court order to garnish income for federal student loans. Still, the creditor must sue you for private student loans.
Is it possible to protect your wages from garnishment?

There are ways to protect your wages from garnishment. For example, you can consolidate your student loans into one loan. This will make it more difficult for creditors to garnish your wages.
You can also rehabilitate your student loans. This is done by entering a voluntary agreement with the loan servicer. Part of the agreement includes making nine consecutive payments to bring the loan back into good standing. These payments are typically around 15 percent of your discretionary income.
Another way to stop many forms of wage garnishment is by filing for bankruptcy. Although this won’t protect your unemployment benefits in all cases, it’s still worth considering. For example, filing chapter 7 bankruptcy will not stop garnishment for child support or alimony payments.
As you go through a chapter 13 bankruptcy, even your alimony and child support garnishments will be halted. You will still need to stay up to date with those alimony and child support payments through a three to a five-year payment plan. So long as you keep making the payments specified in the program, the garnishment action will cease.
In conclusion

Even though you may be unemployed, you still have certain rights regarding your wages and benefits. For example, a creditor is not allowed to garnish your unemployment benefits as long as you don’t have any debt for child support, taxes, or student loans. However, they may try to garnish your wages once you get a new job. To avoid this, it’s best to try and negotiate with the creditor.