If you’ve fallen behind on your student loans, you may be at risk for wage garnishment. Here are some tips on how to avoid garnishment and get back on track.
When you default on your federal student loans, the government can begin an administrative wage garnishment without a judgment from a court.
Under federal regulations, the government can take 15% of your disposable pay. You can, however, protect wages in an amount equal to 30 times the minimum wage.
In order for the government to begin a garnishment of wages, The Department of Education or a guaranty agency must notify you and give an opportunity for a hearing.
In order to avoid a wage garnishment, you must:
- Negotiate a voluntary repayment and make your first payment within 30 days from the date the garnishment notice was sent; OR
- Make a hearing request in writing postmarked no later than the deadline on the garnishment notice.
Request A Hearing
For most people, it’s safest to request a hearing. If you do so within the time specified in the notice, the wage garnishment cannot go forward until the hearing is held.
You can still request a hearing after the garnishment begins, but it won’t stop the government from taking your wages unless you win the hearing.
Defenses To Federal Student Loan Garnishment
The widely-used defense to an administrative wage garnishment order is that the garnishment would cause financial hardship to you and your dependents. You’ll need to provide documentation to sustain your defense.
Other defenses include:
- You were involuntarily terminated from last employment and have been employed in current job for less than 12 months;
- The federal student loan has been paid in full;
- It’s not your loan;
- You are making voluntary payments;
- You have filed for bankruptcy and the case is still open;
- The student loan was discharged in bankruptcy;
- You have a refund right against the school, but have not received the refund;
- The borrower is dead or totally and permanently disabled;
- The loan is not enforceable due to fraud or forgery; or
- You are eligible for a closed school or false certification discharge.
If you receive a notice of a pending administrative wage garnishment, call the collection agency handling your account and get the required forms to request a hearing. Be sure to complete the forms and deliver them within the time required to stop the garnishment.
You may or may not win your hearing, but one thing’s for sure – if you don’t request the hearing, you will definitely have a garnishment to deal with.