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EOS CCA is Garnishing Our Wages Over a Student Loan

By on January 5, 2015

“Dear Steve,

My husband received a call from the EOSCAA in Nov, 2013 that he owed $56000 on a student loan. Between Nov 2013 and March 2014 we tried to get to the bottom of the situation. In March the EOSCAA began garnishing his wages, twice a month at a rate of near $1000. I filled out and mailed in a hardship package to the Dept of Ed containing every bill we pay, 2013 tax forms and a detailed financial inventory showing what we bring in and what is going out and it clearly showed a deficit. We were denied because according to their calculations we should be experiencing a $2000 a month profit making the $1000 a month garnishment more than affordable.

We have never received correspondence from the Dept of Ed. To this day we have never received although requested, a copy of the promissory note which we were told was done electronically. What we were told was that if our son took out this loan, even if he didn’t realize it was a parent loan, he would be prosecuted and serve jail time.

I contacted the EOSCAA and asked how to stop the garnishment. They said if we would pay $2000 a month in addition to the $1000 a month garnishment within 5 months they would place the garnishment on hold. I explained that this was beyond prohibitive and unaffordable and they responded with an “oh well”.

If the garnishing doesn’t stop we will be in financial ruin and not be able to maintain our home. I am desperate for help.

1. Is there a way to stop the garnishment? I will make affordable payments. I need the garnishing stopped.

2. I read about the new law as of July 2014 with “pay what you can afford”. How can we take advantage of that?

3. Do options exist for us?

Linda”

Dear Linda,

I believe you are referring to EOS CCA, a debt collection agency. And since you mention the Department of Education I can only assume these are federal student loans you owe on.

Before the government begins an Administrative Wage Garnishment, one of the letters they send is a notice of an upcoming garnishment and the information on how to appeal the garnishment if there is a financial hardship. It seems that step did not happen for you.

There is almost no reason a federal student loan should be so delinquent that an Administrative Wage Garnishment is necessary. There are just so many options and programs available that can reduce the payment to as little as $0 per month that keep the loan current. For more information on these programs, click here.

READ  I Rehabbed My Loans But I'm Now Being Garnished?

The government defines discretionary income as “For Income-Based Repayment and Pay As You Earn, discretionary income is the difference between your income and 150 percent of the poverty guideline for your family size and state of residence. For Income-Contingent Repayment, discretionary income is the difference between your income and 100 percent of the poverty guideline for your family size and state of residence.”

Discretionary income is not the difference between how you elect to spend your money and what is left over.

Your election on how you spend your money between those numbers is your personal choice. The government feels their debt is a priority and to make room for their obligation you can clear the decks of other obligations you might have through a legal process known as bankruptcy.

However, under an Administrative Wage Garnishment the Department of Education can only garnish up to 15% of the borrower’s disposable income as long as you only have one federal loan. If you have more than one it can be up to 25%.

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

  • Negotiate repayment terms acceptable to the Department or the Private Collection Agency (PCA) and ensure that the Department 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.

Now that the loan(s) were allowed to go so delinquent that they reached the garnishment stage, and hopefully this was not a garnishment after being sued by the Department of Justice, you only real option is loan rehabilitation which is not a bad program.

To rehabilitate your Direct Loan or FFEL Program loan, you and the Department of Education must agree on a reasonable and affordable payment plan.

Your loan is rehabilitated only after you have voluntarily made the agreed-upon payments on time and the loan has been purchased by a lender. Outstanding collection costs may be added to the principal balance.

Payments that have already been collected from you—for example, through the Administrative Wage Garnishment (AWG) process or through legal action taken against you to collect your defaulted loan—do not count toward your rehabilitation payments. (Through AWG, payments will be deducted from your wages until your defaulted loan is removed from default status.)

Once your loan is rehabilitated, you may regain eligibility for benefits that were available on your loan before you defaulted. Those benefits may include deferment, forbearance, a choice of repayment plans, loan forgiveness, and eligibility for additional federal student aid.

I have seen people negotiate loan rehabilitation payments as low as $15 per month and typically the AWG will stop after the fifth payment under this plan.

You can then select an income based repayment plan, as described here and more detail can be found here about loan rehabilitation.

If you want help negotiating a solution I think this guy is really terrific and has had some amazing results.

I hope I have not been too harsh but the reality is there is no reason why any federal student loan should ever make it to the AWG stage when there are so many good options to deal with the loans before that point.

Hopefully the positive outcome from this unfortunate situation is that people will learn about their options from the gracious submission of your question.

Please post your responses and follow-up messages to me on this in the comments section below.

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About 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.

2 Comments

  1. Dorothy Bunce

    January 6, 2015 at 2:13 pm

    Student loan repayment can be managed in Chapter 13 bankruptcy. Best choice when someone can’t reach an agreement with the lender because in Chapter 13, the creditor doesn’t have to agree. No question that Chapter 13 would be the solution of last resort but for many, there is no other choice because Chapter 13 will immediately stop the garnishment and let the family living expenses be addressed first.

    • Steve Rhode

      January 6, 2015 at 3:26 pm

      I agree but in this case just five payments that can be very low can stop the garnishment and return them to an affordable repayment plan.

      And in my humble opinion I don’t think a Chapter 13 should be an option of last resort but is sometimes the first option that should be considered based on the situation.

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