WAGE GARNISHMENT PROCESS
Whether you are expecting a wage garnishment or not, you need to have a deep understanding of the entire process; it will help you determine the expectations required of you, and it becomes easier for you to know the essential steps to resolve the problem.
- Student Loan Defaults
If the borrower fails to pay their student loan within 180 days (and has not been granted a student loan deferment of forbearance), it can result in putting your loan into a delinquent situation. If your loan maintains a delinquent status, going past 270 days on non-payment, it will default. Default means that your student loan debt is required to be paid in full. When in default, there are few actions you can take to resolve your financial situation – to learn more about them, click here.
A loan can also be considered as a default according to the type of loan you applied. Loans under the Federal Family Education Loan Program or William D. Ford Federal Direct Loan, your loan will default if you fail to make payments within nine months (270 days). Loans like Federal Perkins Loan Program, however, your loan will be marked defaulted if you do not make your scheduled payment according to the due date.
- Notice Of A Hearing
A garnishment order can be placed by the Department of Education without having to first sue and receive permission from the courts, while private loans require the extra step. If you have defaulted on a private loan used for educational costs, then you will be sued and receive notice of a hearing. With a federal student loan, you are given notice of the wage garnishment and can still request a hearing. The Student Loan Advocacy Group can advise if requesting a hearing is vital to your wage garnishment removal or can still assist should your wage garnishment already be in effect.
At a hearing you can provide the following defenses if they fit your circumstance:
- You are not the individual responsible for the debt (i.e. the student loan was taken out by an (ex)spouse or person with similar/same name).
- The debt is unenforceable.
- There is an error in how much is stated you owe.
- Your student loans are not in default.
- You are currently going through bankruptcy.
- You are currently in a rehabilitation program.
At the hearing you can also attempt to negotiate a settlement or reinstate your installment plan, preferably at a more affordable rate.
Following the hearing (if there is one), a judgment is issued. If the creditor wins the case or you do not attend the hearing, then the wage garnishment amount is set. Typically, the wage garnishment begins five to thirty days after the judgment (the judgement will specify). This process will continue until the loan balance, and any of the court interest and fees, are paid off in full.
On the other hand, if your case to prevent wage garnishment is stronger and you win the wage garnishment case, your income will not be garnished within a year – or the wage garnishment is reduced depending on the case outcome.