Chances are, if you are looking up information related to student loan garnishments, then you either have a garnishment against you or one is fixing to take place. And while there are many sites providing information on student loan wage garnishment, all of this information can be a bit difficult to digest. That’s why we wanted to simplify the information as much as possible, making it easier for you to understand how these garnishments come into effect and your options for stopping them.
Before we start talking about federal student loans, though, it is very important to understand that private student loans do not benefit from the same advantages that federal loans have. If you have a garnishment against for you for a private student loan, you will need to speak with your lender or an attorney about your garnishment deferment options. With that said, the following information only applies to federal student loans.
You’re Not Alone: Student Loan Wage Garnishment Statistics
The average student graduates with more than $45,000 in student loan debt and has an average monthly repayment of $351. Unfortunately, though, many of these students don’t have the monetary means to make these payments, with a percentage of them defaulting on their loans and having a wage garnishment enforced against them. In fact, every day there are 3,000 students who default on their loans; this totals to be more than 1 million people each year who enter into default status.
What is so unique about federal student loans?
Unlike any other type of consumer debt, federal student loans come with the advantage of having numerous repayment options. And in the event that you cannot afford your repayment amounts, you may qualify for a deferment, forbearance, loan discharge, or even loan forgiveness. And while having such a variety of repayment options available can be of the utmost value based on your financial situation, it is crucial to understand that there is always another side of the fence. And in regards to the other side of the fence in relation to student loans is the side where the federal government can put into effect an assortment of powerful collection tools to ensure they are repaid the money owed to them. In fact, the most powerful tool the federal government has in their toolbelt is the ability to enforce a garnishment without any need for a court-ordered judgment. Whereas if you have defaulted on a private student loan, a judgment does have to be obtained to start garnishing your wages.
How does the garnishment process work?
Generally, a wage garnishment will be initiated as early as three months from the date in which the borrower defaulted on the loan. A letter is usually sent to the person to inform them that the garnishment is going to take place and that a hearing can be set to come up with other options if the borrower would prefer another repayment plan than wage garnishment. Unfortunately, many people who receive this letter don’t take advantage of going to a hearing. As long as the borrower responds within 30 days, though, and states he or she wants to go forward with the hearing, then the garnishment process is stopped and does not start back until the hearing is over. With this in mind, if you receive a letter stating you have 30 days to respond regarding the hearing, it is most definitely in your best interest to respond. But what happens if I respond after the 30 days? If you decide you do want a hearing but the 30 days have already passed, you can still take advantage of the hearing process. Please be mindful, though, that the garnishment process will not stop. It will still move forward. On the upside, though, if the appeal at your hearing is granted, then the wage garnishment will stop or be adjusted accordingly.
Knowing How to Get Out of Student Loan Wage Garnishment
You have a wage garnishment against you and you need it to stop. As long as you take the appropriate steps, most wage garnishments can be canceled. Let’s take a look at several ways you can have your student loan wage garnishment stopped.
Prove Financial Hardship
The federal government wants their money but they don’t want it at the expense of you not being able to meet your basic living needs. If repaying your loans is going to cause a financial hardship, you can have the garnishment stopped, but it is your responsibility to prove that the financial hardship does, in fact, exist. To do this, you will need to submit a financial disclosure form. This form will outline your income and expenses and show that you simply don’t have the money to meet your repayment obligations. It will also show how a wage garnishment will keep you from being able to meet your basic living expenses. If you are granted the dismissal of your wage garnishment, your case will be reviewed on a regular basis, usually every six to 12 months.
Consolidate Your Loans
Another valuable option for stopping a student loan wage garnishment is to consolidate your loans. In doing this, you are not only stopping the garnishment but you are also qualifying the loans for an income-driven repayment plan. Take for example you want to follow the federal repayment plan option that bases payments on 10 percent of your income. You can consolidate your loans and pay 10 percent of your income toward your loans, which is much more advantageous than having your wages garnished. In fact, during a wage garnishment, anywhere from 15 to 25 percent of your wages can be garnished.
Rehabilitate Your Loans
Another highly-suggested option for stopping a wage garnishment is to enter into a rehabilitation program for your loans. During the time period of 10 months, you will have to make nine monthly payments, with payment amounts based on 15 percent of your discretionary income. Once these payments have been made, the wage garnishment will stop and you can enter into an income-driven repayment plan. Best of all, depending on your exact financial situation, the nine monthly payments that you must make may be as low as $5 a month.