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.


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)..

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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: info@ecmc.org or jkupper@ecmc.org
Website: http://www.ecmc.org/

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

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.
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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

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

Damon Day - Pro Debt Coach

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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.
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