Current received a garnishment order for my wages for a debt with the Department of Treasury. This debt is from a 2005 foreclosure of a USDA Rural Housing Loan. I get my taxes taken every year but have not filed bankruptcy or incurred any additional debt. My credit is no longer affected by this because of the amount of time since the debt started. The US Dept. of Treasury has offered me one option for pay back and that is a month payment over a 3 year period, which equaled out to about $1000 a month. That amount is not at all feasible for our family. I am also currently a member of the US Army, 8 years of service.
I would like to know if there is any way to combat this debt. Do I need a lawyer? Are there any types of forgiveness programs I may qualify for?
First off, I have to state the obvious that if you want to stop having your tax refunds intercepted then change your withholding so you are not getting a refund at the end of the year. If there is no refund then there is nothing to intercept.
A debt to the federal government allows the government to administratively garnish your wages without going to court. They can also add an additional 28 percent to the balance as a collection fee if the amount due winds up in default.
If you can’t pay and the government then goes to garnish your wages they can only collect 15 percent of your take-home pay or up to 25 percent if you have multiple garnishments. That might be an amount that is far less than the requested $1,000 a month. Sometimes letting them garnish is the more affordable way to deal with some government debts.
But if you jus received the notice of garnishment there are some things you can do. See this article for specifics.
But in short you can request a lower amount, “If a request for a hearing is received within 15 business days following the mailing of the written notice to the debtor, a hearing must be held prior to the issuance of a wage garnishment order. If a request for a hearing is received after 15 business days, a hearing must still be held; however, the garnishment order may be issued before the hearing is concluded. A hearing may be requested concerning the existence or amount of the debt, or the terms of the proposed repayment schedule under the garnishment order (hardship).
The federal agency will determine whether the hearing will be oral or written. If the agency decides to hold an oral hearing, the agency will decide when and where the hearing will be held, and the debtor may decide whether the hearing will be in-person or by telephone. The debtor will have to pay any travel expenses for an in-person hearing.” – Source
If you can prove the garnishment would create a financial hardship at the level requested, you might be able to get it lowered.
The Department of the Treasury even has an online calculator to determine the amount your garnishment should be. Click here to use their online calculator.
But you can always seek the advice of an attorney who is licensed in your state. There is often no replacement for sound and specific legal advice.