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My Wages Were Garnished for a Student Loan Without Taking Me to Court. – Pamela

“Dear Steve,

I have a student loan….i went thru the rehab program last year…i couldn’t agree with nco on a set payment of 115.00 a month they said to low…they sent paperwork to my job for garnishment…my question is this the garnishment was sent from ecmc letterhead in re: nco financial for garnishment..i was told by a lawyer (for advise only) that they needed a court order to sue me..can they can send paperwork to my employer without a court order.

Pamela”

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The Answer

 

Dear Pamela,

I’m afraid to tell you, the attorney appears to be incorrect. Government backed student loans can garnish your wages without having to get a judgment in court.

Under the Higher Education Act, the Department and guaranty agencies may require employers who employ individuals who have defaulted on the repayment of a student loan to deduct 15% of the borrower’s disposable pay per pay period toward repayment of the debt. Also, the Debt Collection Improvement Act of 1996 permits the Department to garnish up to 15% of disposable pay. Garnishment may continue until the entire balance of the outstanding loan is paid. You should note that wage garnishment is used only for borrowers who refuse to voluntarily repay their defaulted loan and is not used with those borrowers who continue to make regular and timely monthly payments.

The Department of Education or a guaranty agency must notify you before the garnishment. You must be given the opportunity for a hearing to challenge the existence or amount of the debt and the terms of the repayment schedule. The garnishment cannot go forward if you request a hearing within 30 days of the receipt of the notice. If you request a hearing after that date, the garnishment will usually begin, but you can still stop it later if you win your hearing.

Administrative wage garnishments for government student loans are handled by the state guaranty agency that is servicing the loan. Since you mentioned ECMC that leads me to believe that you live or lived in Oregon.

ECMC is an approved guaranty agency and is a private, non-profit corporations designated to administer the Federal Family Education Loan Program (FFELP)..

Educational Credit Management Corporation (Oregon)
Suite 190
1500 Valley River Drive
Eugene, OR 97401
Phone: (541) 984-2450
Toll-Free: (888) 323-3262
Fax: (541) 984-2468
TTY: (541) 984-2469
Email: [email protected] or [email protected]
Website: http://www.ecmc.org/

As the borrower you have the right to:

  • Be sent a notice 30 days prior to ED ordering wage garnishment that explains ED’s intention to garnish, the nature and amount of the debt, an opportunity to inspect and copy records relating to the debt, object to garnishment to collect the debt, and avoid garnishment by voluntary repayment;
  • An opportunity to enter into a written agreement under terms agreeable to ED to establish a voluntary repayment agreement;
  • An opportunity for a hearing to present and obtain a ruling on any objection by the borrower to the existence, amount, or enforceability of the debt;
  • An opportunity for a hearing to present and obtain a ruling on any objection that garnishment of 15% of the borrower’s disposable pay would produce an extreme financial hardship;
  • An opportunity for a hearing to present and obtain a ruling on any objection that garnishment cannot be used at this time because the borrower is now employed within a 12-month period after having been involuntarily separated from employment;
  • Having garnishment action withheld by filing a timely request for a hearing, until the hearing is completed and a decision issued;
  • Not to be discharged from employment, refused employment, or subject to disciplinary action due to the garnishment, and to seek redress in federal or state court if such action occurs; and
  • Not to have any information provided to the employer but what is necessary for the employer to comply with the withholding order.

To avoid garnishment of 15% of disposable pay, the borrower must:

  • Negotiate repayment terms acceptable to ED or the Private Collection Agency (PCA) and ensure that ED receives the first payment by the response deadline date on the garnishment notice, which is 30 days from the date the garnishment notice was sent;
  • Make a hearing request in writing postmarked no later than the deadline on the garnishment notice;
  • If requesting copies of documents, make a request for a hearing, because requesting document(s) does not delay a garnishment order;
  • Provide proof to support any objection made to the existence, amount, or enforceability of the debt, or a claim of legal exclusion or financial hardship;
  • Pay any expenses he or she incurs to obtain legal representation and to attend an in-person hearing; (All in-person hearings are held at one of the three regional offices: Atlanta, Chicago, or San Francisco. The borrower is responsible for the cost of attending and those of any witnesses to attend on their behalf.) and,
  • Initiate any legal action against his or her employer if the employer discharges, refuses to hire, or takes disciplinary action against the borrower based on the garnishment action.

You can request a hearing by completing this form and sending it to:

U.S. Department of Education
Chicago Service Center
Attn: Hearings Branch
P. O. Box 617547
Chicago, Illinois 60661-7763

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

My Wages Were Garnished for a Student Loan Without Taking Me to Court.   Pamela
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • darrell

    Steve, can GC service/ecmc garnish for more then what the loan was for?

    • http://GetOutOfDebt.org Steve Rhode

      On student loans an additional substantial percentage can be added for collection costs and fees.

  • Darrell

    steve, i live in florida can a hearing by phone? Darrell 

    • http://GetOutOfDebt.org Steve Rhode

      You’d have to ask the court or a Florida licensed attorney. I have no clue.

  • jade

    Hi Steve
    thank you for your advice, and I will be preparing a cash flow stmt. thanks again… jade

  • Steve Rhode

    Typically student loans do not need to go through court to garnish. but I’m not sure what the paperwork you have says. Just be prepared with a copy of your income and expenses to show what you your monthly cash flow looks like to support any payment you are asking for.

  • jade

    hi steve
    thanks for your reply. i got the garnishment ltr and all and the ltr that states if i want a hearing… i plan on submitting for the hearing for another review … what information you think i should submit with it …. i tried on 2 occasions to reason with dcs and offer 100 a mth but they said that was a refusal to pay… when i challenged the last person advising it ws not a refusal to pay but i am trying to advise them how much i can afford per mth and they refused… on private loans do i have to wait for it to go through court or do dcs act on behalf of dept of edu and can garnish my wages.. pls advise … thx jade

  • Steve Rhode

    Sorry to hear it is a private student loan. Unfortunately a private student loan is almost the worst kind to have. The private loan lenders do not have anywhere near the same plans and options that a government backed loan has.

    Student loans are unusual in that they may go for a garnishment without needing to go to court as I understand it.

    Unless the lender offers a plan you can afford, since you are the person responsible for the loan, and you have not come to a satisfactory payment arrangement I do not see any reason why they would not be able to garnish your wages.

  • jade

    no it is a private loan i took for my daughter while she completed her education under my social, however I started back school last august… i was advised if i stayed in school it would buy me some time … when dcs contacted me i offered them 100 p/mth but they told be that was a refusal to pay and it was not enough.. pls advise …i recd ltr from dcs advising the garnishment… ty

  • Steve Rhode

    Is the wage garnishment for a debt other than for student loans?

  • Jade

    Hi Steve
    Is there any Federal laws stating if you are still furthering your education, can they still enforce wage garnishment?

    TY Jade

  • Jade

    Hi Steve
    Is there any Federal laws stating if you are still furthering your education, can they still enforce wage garnishment?

    TY Jade

    • http://GetOutOfDebt.org Steve Rhode

      Is the wage garnishment for a debt other than for student loans?

      • jade

        no it is a private loan i took for my daughter while she completed her education under my social, however I started back school last august… i was advised if i stayed in school it would buy me some time … when dcs contacted me i offered them 100 p/mth but they told be that was a refusal to pay and it was not enough.. pls advise …i recd ltr from dcs advising the garnishment… ty

      • http://GetOutOfDebt.org Steve Rhode

        Sorry to hear it is a private student loan. Unfortunately a private student loan is almost the worst kind to have. The private loan lenders do not have anywhere near the same plans and options that a government backed loan has.

        Student loans are unusual in that they may go for a garnishment without needing to go to court as I understand it.

        Unless the lender offers a plan you can afford, since you are the person responsible for the loan, and you have not come to a satisfactory payment arrangement I do not see any reason why they would not be able to garnish your wages.

      • jade

        hi steve
        thanks for your reply. i got the garnishment ltr and all and the ltr that states if i want a hearing… i plan on submitting for the hearing for another review … what information you think i should submit with it …. i tried on 2 occasions to reason with dcs and offer 100 a mth but they said that was a refusal to pay… when i challenged the last person advising it ws not a refusal to pay but i am trying to advise them how much i can afford per mth and they refused… on private loans do i have to wait for it to go through court or do dcs act on behalf of dept of edu and can garnish my wages.. pls advise … thx jade

      • http://GetOutOfDebt.org Steve Rhode

        Typically student loans do not need to go through court to garnish. but I’m not sure what the paperwork you have says. Just be prepared with a copy of your income and expenses to show what you your monthly cash flow looks like to support any payment you are asking for.

      • jade

        Hi Steve
        thank you for your advice, and I will be preparing a cash flow stmt. thanks again… jade

  • paris

    hey steve! so it is true that if i request for a hearing in the 30 day period, i wont have wages garnished? i just need to know whats going on!! the paper was sent out june 12, 2010 so i have until july 12, 2010 to have my hearing letter postmarked correct? help me out steve please.

  • heather

    To whom this may concearn:

    i have a question today my taxes where supose to be in the bank and they where so we called a 800 number on the irs fourm and it told us the wages where being garnished for a student loan but i was never given a court date the last mail i reseved was on dec 29 of 2009 last year and that was just saying “since this account has been referred to our office for collection, the balance has remained unpaid. please give this matter the attention that is deservers” befor that i was sent a fourm to fill out and return witch i did and was never mailed back about the paper and now a month later they are takeing my taxes and i was never told about this i was never given a option to go to court is this legal? and is there any advise you can give me about this. thanks for your time sir

  • pamela

    steve i want to thank you for the advise because i spoke with this lawyer two times (for advice which i appreciated very much)..i guess..i live in daytona beach,florida…my employer from payroll called me and told me they rec’d the letter about the garnishment from nco/ecmc..this is how i found out about it (even though i was aware this might happen) i was waiting on a notice so i could respond within the 30 days…payroll sent me by email the letter and i guess i would have to respond by 1/2/09 the date the letter was issued by ecmc/nco..i will send the letters overnight just to make sure they get their within the time frame…i take it i don’t need a lawyer to file for the hearing…..i have not rec’d anything from nco/ecmc by the garnishment..
    hope to hear from you soon.. pamela..thank you so much..
    and i will keep you in touch with you about how this ends…

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