July 9, 2021

How To Stop Student Loan Wage Garnishment

Chipper Help

Paying off student loans as you work can be difficult, especially if you’re not making enough to cover your expenses and loan payments at the same time. You risk going into default if you continuously fail to make payments on time. When your student loans are in default status, your student loan lender may garnish your wages to pay off your debts.

Whether federal or private, when your lender garnishes your wages by order of the Department of Education, they take part of your income and redirect it to pay for your student loans. Keep reading to learn how you can stop wage garnishment on student loans.

How To Stop Student Loan Wage Garnishment

Student loan lenders will coordinate with the Department of Education in sending you a letter of intent regarding wage garnishment. This letter is to notify you that they are taking action to get payments on your student loans through your wages.

As soon as you receive a student loan wage garnishment notice, you must take control of the situation to avoid getting up to 15% of your income redirected to your student loan lender. First, read the notice of intent carefully and then confirm whether the details are correct. Next, consider the following options to stop wage garnishment on student loans before it takes effect.

Win the Case Against Your Lender

You can present certain documents to prove you don’t deserve wage garnishment. See if any of the following conditions apply to your situation:

  • Financial Hardship: You can present documents and financial statements showing that wage garnishment would lead to extreme financial hardship for you and your dependents.
  • Change in Employment: Your current employment situation may have changed since you started paying off your student loans. You may have better chances of winning your case if you have been in your current job for less than a year.
  • Current on Your Loan: You can prove that you are not in default and that you have been making payments accordingly. You may also be in a repayment program that your lender is aware of but may have overlooked when sending the notice of intent.
  • Not Your Debt: Sometimes, you might be a victim of identity theft, causing your name to be confused with someone else’s.
  • Eligible for Forgiveness: Your remaining balance may be eligible for student loan forgiveness, making wage garnishment unnecessary.

Consolidate Your Student Loans

You may get out of wage garnishment through student loan consolidation. However, you can only do this before garnishment takes effect. Consolidating your student loan involves making a deal with the Department of Education to undergo income-driven repayment options.

Student loan consolidation combines your current student loan with another policy that has a potentially more affordable payment schedule to help you get out of default. Federal repayment policies include the following:

  • Revised Pay as You Earn (PAYE): Monthly payments equal 10% of your income
  • Income-Based Repayment (IBR): Monthly payments equal 10%-15% of your income
  • Income-Contingent Repayment (ICR): Fixed monthly payments less than 20% of your flexible income for 12 years

How Does Student Loan Wage Garnishment Work?

When you repeatedly fail to make payments on your student loans, you enter delinquency. Continuous delinquency leads to default status, where your student loan lenders can earn the right to seek repayment through your wages.

The federal government has the administrative right to conduct wage garnishment to pay off your federal student loans in default. This administrative right means they don’t need legal judgment to go after your wages in pursuit of repayment.

Meanwhile, private student loan lenders need to take you to court to assess whether they can seek wage garnishment as a form of repayment. They must win their case against you to begin the garnishment process, which you can still reverse through several options as we presented here.

Stop Wage Garnishment on Student Loans

Stopping student loan wage garnishment involves winning a case against your federal or private student loan provider. You can present documents to prove that wage garnishment would severely affect your current situation or that the debt in question is not yours in the first place.

Be sure to review the notice of intent you receive from the Department of Education to understand your situation. You can also consider hiring a lawyer to assist you in stopping wage garnishment if you have difficulty working through the issue on your own.

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