Wage garnishment is a legal process, which allows the employer to withhold some portion of a person’s earnings in order to pay off their defaulted loans or other debts. It is one of the most common methods used to collect defaulted federal student loans. The wage garnishment law varies from state to state, but generally 15 percent of the borrower’s disposable income is deducted and used in the repayment of debt.
Wage garnishments can occur for a number of student loans, including delinquent student loans. Federal defaulted student loans are subjected to wage garnishment under the Consumer Credit Protection Act (CCPA).
How does Wage Garnishment Work?
The wage garnishment for defaulted federal student loans is called Administrative Wage Garnishment (AWG). In AWG, the guaranty agency can order the employer to deduct 15 percent of the borrower’s daily disposable pay and direct it towards the repayment of defaulted loans. Wage deduction continues until the outstanding balance is completely paid off.
A notice is sent thirty days prior to wage garnishment, which informs the borrower about the government’s intent to garnish their wages, their rights, and appeal procedures. The debtor may request a hearing within 15 days of receiving the notice. The government can continue the AWG process if a hearing request is made after 15 days of receiving the notice.
How to Avoid Wage Garnishment?
An individual can avoid garnishment of 15 percent of their wages through several ways, including:
- The borrower must make acceptable repayment arrangements and make the first payment within 30 days of receiving the garnishment notice.
- The borrower can put off wage garnishment by requesting a hearing within 30 days of receiving the notice. For FFEL loans, the time limit is 15 days. If the borrower requests a hearing after that date, the wage garnishment will continue. However, it can be discontinued if borrower wins the hearing.
- The most common defense against wage garnishment is to prove that wage garnishment would pose extreme final hardships to the borrower and their family by providing a Financial Disclosure Statement to the Department of Education.
How TurboDocs Can Help You?
Wage garnishments can cause serious financial problems for borrowers who are already defaulting on their student loans because of lack of finances. It is important to explore your options to prevent your wages from being garnished. There are several flexible loan repayment programs offered by the government that can assist individuals who are defaulting on their student loans.
The earlier you address this problem, the more likely you will be successful in stopping the wage garnishment. It is also very important to know your rights and understand that what and how much can be garnished. TurboDocs is an organization that helps individuals in managing their student loan debts. We can help you in understanding the wage garnishment process and negotiating with the lender.
For consultation on how to stop student loan wage garnishment, contact TurboDocs. Call us at (855) 782-0744 to get your finances back in order.