Disclaimer: The following information is for education purposes only and is the formulation of an opinion. It is not legal advice or intended as such. Always consult with a qualified attorney before making any legal decision.
If you are having your wages garnished due to student loan debts, there is a legal way to stop it in many cases.
The first step is to calculate your total yearly income. For example purposes, let’s assume a married couple has a combined income of $18,000 and a single person has $10,500 per year.
- Single = $10,500
- Married = $18,000
The next step is to see where your income falls with respect to the Federal Poverty Guidelines or FPG.
For 2014, the FPG is as follows:
- Single = $11,490
- Couple = $15,510
If your income falls under the FPG, you can stop all student loan wage garnishments. In our example,.the single person making $10,500 per year is well under the $11,490 per year FPG minimum. This person qualifies for having zero dollars garnished.
In our example of the married couple, we can see they have an income of $18,000 but the FPG is $15,510. They do not automatically qualify for zero garnishment, but they may qualify for very low garnishment.
They start by showing the difference between what they make and the FPG: $18,000 (minus) $15,510 (equals) $2,490 (difference). If we divide $2,490 by 12 months, we get $207.50 per month. This is the maximum that can be garnished.
Assume now that a debt collector is garnishing as follows:
- Single = $350.00 month
- Couple = $500.00 month
Using our examples above, the single debtor can eliminate the entire $350.00 per month wage garnishment. The Couple can reduce their garnishment by $292.50 per month.
Once you are armed with the facts, how to get the debt collector to play ball?
First, you send them a letter detailing these facts (make sure you send all mail certified so you have proof it was received). You demand the changes take place on your account within 10-days. In 10-days, you verify the changes were made and ask for a written copy of the verification from the debt collector. If you have no verification, then send a second demand letter and give the debt collector 5-days to comply and provide written proof of compliance.
Assuming the debt collector ignores your letters, the next step is to go to your local area community law center and get free assistance in filing the necessary paperwork to force the debt collector into submission. Usually within days of the legal filings, the garnishment will cease or be reduced down to their appropriate levels–the debt collector knows its better and cheaper to comply that fight you legally.
If your community does not have a free legal services law center that can guide you, then you can often hire a wage garnishment attorney to send a demand letter to the debt collector. This option is often less than a few hundred dollars and such letters generally get the job done. If not, you may have to hire the attorney to work on the case until the issue is resolved.
You can also do the paperwork on your own if you are unable to afford an attorney.
First, you will need to file for a Department of Education hearing. (Find the application form here ) Or snail mail here: U.S. Department of Education, Chicago Service Center, Attn: Hearings Branch, P.O. Box 617547, Chicago, IL 60661-7547
Once you get a hearing date, you will need to attend (at a location near you) and show proof as to why you qualify for either zero garnishment or reduced garnishments. (Find more details about Hearings here) Types of proof can include pay-stubs, IRS tax filings, and so forth.
Other important challenges include (this is not an exhaustive list):
- You were involuntarily terminated from last employment and have been employed in current job for less than 12 months,
- You have repaid the loan,
- It is not your loan or there is some other reason why you do not owe the money,
- You have already entered into a repayment agreement and are making payments,
- You have filed for bankruptcy and the case is still open or the loan was discharged in bankruptcy,
- The school failed to pay you an owed refund,
- The borrower is dead or totally and permanently disabled,
- The loan is not enforceable, for example because of forgery, or
- You are eligible for a closed school or false certification discharge.
Find more information at the Student Loan Borrower Assistance website.
Lastly, if you get a notice of pending wage garnishment, do not ignore it—fight it immediately by filing for a hearing within the 15-day deadline period. As a rule, contest, contest, contest, fight, fight, fight and when all else fails, become the biggest pain in the ass in the world to everyone trying to collect from you—make it so bad that they put you on the last of the list.
If you cannot escape wage garnishments and you need that extra money for something like say to feed yourself or help a starving brother or mother, etc., AND, if you can swing it, JUST leave your job every time the wage garnishment pops up—the debt collectors have to reset and wait for you to find another job and for that job to show up in the system before they can get the garnishment going again–and that takes them a lot of time and costs. After about the 2nd or 3rd job switch, they will move your account to the bottom of the pile or sell your paper to another debt collector and that will buy you more time before they eventually find you again.
Or you can do what over two millions US students have already done—you can leave the country and work outside the US.
Note: In the case that you miss your 15-day garnishment notice and appeal deadline and you want to reactivate that deadline, then this tactic might be of use to some of you who like their job and do not want to permanently leave it. If you are one of those lucky people with a helpful employer, you can arrange to quit your job officially. Then have your ex-employer immediately send a notification to the debt collector that you no longer work there. Wait about a week, then have the employer hire you back. The debt collector will have to re-notice the employer and your 15-day protest and appeal period will start anew.