If you have taken a student loan to study for your dream, you likely have already heard of wage garnishment. What is essential to know is that it can do harm to your budget and overall financial situation if you do not learn how to deal with it adequately.
In this article, you will learn what wage garnishment is, how it applies to student loans, what the conditions are for it, as well as the process and whether you are able to stop it from happening.
It is crucial to understand how student debt relief works since it may help you effectively manage the payments towards your student loan and never have to worry about wage garnishment.
What is Wage Garnishment?
Wage garnishment means that a part of a person’s wage or wages is withheld by their employer to compensate for a debt the person owes to a creditor.
When it comes to student debt, wage garnishment is used by the government to collect the student loan payment which is overdue.
Wage garnishment can negatively affect the financial stability of the borrower, and understanding its processes and implications is extremely important.
How Does It Apply to Student Loans?
Wage garnishment for student loans is usually a last resort when there have not been any payments in a long time. In the case of federal student loans, the government can take a share of wages even without an order issued from the court if the loan is in default.
This is possible after not making a payment for the loan in 270 days – 9 months. After this time period, the U.S. Department of Education’s debt unit can contact the borrower’s employer and tell them to start withholding some of the wages.
They can take up to 15 % of the borrower’s disposable income, which is the part of the paycheck left after taxes, Social Security, and Medical care.
Conditions for Student Loan Wage Garnishment
The conditions for student loan wage garnishment are as stated in the previous paragraph. For private student loans, however, the lender should bring the borrower to court and obtain a judgment.
Then, the garnishment can proceed. This process can help the borrower because they may negotiate additional opportunities and repayment arrangements.
What is also important to know is that garnishment cannot take anything below 30 times the federal minimum wage, which ensures protection for individuals with low-income status.
The Wage Garnishment Process
Before the garnishment begins, the borrower receives a notification. This notification, sent by the services or collection agency, informs the borrower that their student loan is in default.
As we already know, this is not the case with federal student loans, where the government can start taking a share of wages once 9 months of non-payment have passed.
When the garnishment is authorized, the collectors send an order to the employer to instruct them to start taking a certain amount of money from the borrower’s wage.
Can You Stop Wage Garnishment?
Avoiding wage garnishment for student loans requires taking swift action. The first step is talking to your loan servicer. Maybe your servicer reps can set you up with an income-driven plan or else deferment or forbearance.
They may even offer to give you a break temporarily or reduce your payment amount so that you can get back up on your feet. After you engage them, maintain your own record of all correspondence.
When your loans are already defaulted, they can only be returned to good standing if you use the options available under the loan rehabilitation program.
This involves making a number of on-time payments that are large enough to both satisfy the delinquency and advance something toward the loan’s total balance.
If you’re facing a wage garnishment order or an actual lawsuit, you may want to seek the help of an attorney who specializes in student loan law. Prevent wage garnishment and regain power over your finances.
These are the two steps to take if you want to hold onto your income. They are covered here, with a special focus on finding an affordable way to obtain professional assistance.
Making the right moves can “stop the bleeding” from your pay and signal to your creditors that they need to look elsewhere for repayment.