Student Loan Garnishment
What is Student Loan Wage Garnishment?
Garnishment of your wages is one of the remedies that can be sought by the government to recover money owed on defaulted student loan debt. The garnishment itself is normally deducted from your paycheck by your employer’s payroll department and the amount taken from your check is sent to the government as payment on your defaulted student loan. The amount of the garnishment is not to exceed fifteen percent of what the government deems to be your disposable income. The garnishment is not allowed to exceed thirty times the federally mandated minimum wage.
Courts & Judgments
To begin you must understand that the garnishment can be ordered by the government without judicial process and procedure. Many students wrongly that believe that their wages cannot be garnished without a court judgment or court order. While this is mostly true for other types of debt, for student loan defaults, the courts do not need to be involved. This means that, unlike for other types of judgments and debts owed, you cannot avoid the garnishment by avoiding being served a summons for a court hearing.
Wage Garnishment Notification
The government is required to notify all borrowers that they are in default prior to the issuance of an order for a non-judicial garnishment. This notification will have a time period within which the defaulted borrower can pay the debt, catch up on the defaulted amount, and resume payments, or dispute the garnishment or request a formal hearing. Clearly if you comply with the notification and bring the loan up to date in payments or pay it off then you need to ensure that the government acknowledges that you have brought the loan to current status and to ensure that they discontinue their pursuit of a garnishment.
Disputing The Garnishment
If you wish to dispute the garnishment because you are disputing what you owe, disputing the loan debt, claiming the garnishment will create undue hardship, or for some other reason then you need to respond to the notification by following all of the procedures listed in the notification by which you are allowed to request a hearing. If you fail to dispute the garnishment within the time specified in the notification then the garnishment will proceed. You can still file an objection in order to dispute the garnishment but it is possible and in fact probable that the garnishment will begin prior tp the hearing date. Garnishments will only continue for 60 days after a late dispute is filed.
Other Consequences
It is important to note that under the provision in most student loans the one that holds the loan can demand payment in full anytime the loan enters into default. What this means is that you would not only be responsible for bringing the loan up to date and current, but that you would be responsible for paying the loan debt off in its entirety. This is not a common practice because oftentimes the student that is in default is also not in a position to payoff the debt in full. But you must understand that it is a possible consequence to any default.
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