Bankruptcy Law, Student Loans

How to Deal with a Student Loan Wage Garnishment

Imagine you have received a warning letter, stating that your student loans are in default and you may face garnishment of your wages. Or maybe your employer has already garnished your wages. If this has happened to you, it is important to examine your options carefully.

Certain reasons may allow you to challenge a student loan wage garnishment based on your income, employment status, the procedures that are followed when starting the garnishment, and other details. The sooner you address a student loan wage garnishment, the more likely you may be successful in reducing or stopping the garnishment.

First, you will want to find out why your employer is garnishing your wages. This cannot occur unless you are in default of your student loans. Defaulting on your student loans means you have not made a payment for more than 270 days. Loans may vary, so it is a good idea to review the promissory note you signed when you took out your loan.

Your loan servicer is required to give you 30-day’s notice, with a “Notice of Intent to Garnish” before garnishing your wages. The following information should be included in the notice. You have the right to:

• Request and inspect copies of your student loan records;
• Request a hearing to present evidence that the garnishment should not be allowed;
• Enter into a repayment plan with the loan servicer.

Requesting a Hearing

If you are in default, your employer can begin the garnishment process with your loan servicer. The loan servicer contacts your employer to determine your earnings and based upon the information provided, the servicer calculates the amount that can be legally garnished from your wages. The amount is typically 15% of your disposable earnings.

You may request a Hearing to Challenge a Student Loan Wage Garnishment because of the following reasons:

• You have filed for bankruptcy;
• You are already on a repayment plan;
• You qualify for forgiveness, cancellation, or discharge of your loan;
• You were involuntarily terminated from your last job of less than 12 months;
• You have already repaid your loan, the loan was forgiven, or you no longer owe funds.

Stopping a Wage Garnishment

If your income is very low, you may be exempt from garnishment. Also, if your employer is taking too much out of your paycheck, contact your loan servicer and request a correction. Another way to avoid wage garnishment is to place the debt into a new Direct Consolidation Loan with the U.S. Department of Education. This will allow you to enter an income based repayment plan, with your monthly payment based on your income or available budget. This will allow your new loan to be reported as current.

You may also stop wage garnishments with voluntary payments. Voluntary payments offer many advantages over garnishment, such as improving your credit rating or reinstating eligibility for federal student loans in the future. You may also opt for a reasonable repayment plan with the Department of Education. Payments may be as low as $5 and if you commit to the required five required payments, the wage garnishment will stop. Once the loan is rehabilitated you can return to a good status with the Department of Education.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at