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How Can I Avoid My Federal Student Loan Wage Garnishment?

Written by Steve Rhode

Question:

Dear Steve,

I am 26 with a daughter and a wife and a LOT of student loan debt. I have been paying my private loans on time and am up to date there but until just recently, I was unaware I had a federal loan in default that I was not paying. I failed to make a payment plan in a timely manner and the department of education has contacted my employer and will be taking 15% of my paychecks.

I talked with both the debt collection company as well as the dept of education and my only 2 options are to pay the full $19,000 on the spot (I have about $70 to my name right now) or make 5 consecutive monthly payments, all the while losing a large chunk of my check.

Is it possible for me to avoid the wage garnishment at this point? My employer said he will wait until Friday of this week to actually do anything so that gives me some time to try and work something out but I am really at a loss here. I was just doing some online research and came across your site and figured it would be worth a shot. Any advice you can provide would be greatly appreciated.

Thank you!

Craig

Answer:

Dear Craig,

It takes a lot of time for a wage garnishment to fall into place. I think we can both agree the federal student loan was painfully overlooked. But here are some articles that can help:

From How Do I Stop My Student Loan Wage Garnishment?

“So, if that’s the case in your situation there are two things you can do to stop the garnishment.

The first would be to follow the notice of appeal in the notice of garnishment you would have received. You can appeal the size of the garnishment if it creates a burden on your financial responsibilities.

If it is too late to appeal the AWG then the most logical solution would be to look at the rehabilitation approach. Under that federal loan program you would enter into an agreement to make a reasonable and affordable monthly payment on top of the garnishment for five months. This payment can be as little as $5 per month.”

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From The Easiest Way to Stop a Student Loan Wage Garnishment – Loan Rehabilitation

“In general though, the Department of Education must agree to a reasonable and affordable payment, that will be temporarily tacked on above your wage garnishment. I’ve seen these payments as low as $5. If you go this route and bite the bullet for the five required payments, the wage garnishment will stop.”

From The Most Overlooked Way to Stop a Federal Student Loan Wage Garnishment

“Just because you are in default it does not prevent you from consolidating your loans into a new one. When you do that your new loan will be current and reported as current. The old delinquent loans will be paid off. Even a loan rehabilitation won’t erase your delinquent repayment history so what’s the point anyway.

The U.S. Department of Education says “If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the Income-Based Repayment Plan, Pay As You Earn Repayment Plan, or Income-Contingent Repayment Plan.”

From How to Easily Stop a Federal Wage Garnishment

“If you or someone you know has received a wage garnishment notice and feel the party to be garnished can not afford to be able to survive on the garnished funds then you can do the following:

Request a review of the debt and garnishment action. This will immediately stop any pending garnishment until it is completed.

Prove to the Department of Education the garnishment creates a financial hardship.”

Here is What the Department of Education Says

“You have 30 days from the date of the notice to object to garnishment. You must object in writing and request a hearing. If you do so after the 30-day period, garnishment will be initiated and will continue while your objection is considered and a decision issued.

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Your loan holder arranges a hearing on your objection. The hearing may be held in person or on the phone or may be based simply on records you submit to make your case. A decision on your objection should be made within approximately 60 days from the day that your hearing request is received.

For more specific information about garnishment or the hearing process, contact your loan holder.” – Source

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.





About the author

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.

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