Student Loan Garnishment: What It is and How to Handle It

Student loan garnishment is a debt collection method used by the federal government to gather funds from people who have defaulted on paying their student debts. The process involves taking a portion of your wages from your paycheck before you have access to it and putting that money towards paying your loan. Depending on the size of your loan and the portion of your wages that is garnished, this could be a financial burden that stays with you for several years of your life.

The amount of your income which is taken under a garnishment order is based on your disposable income. For a garnishment relating to a student loan, the maximum that can be taken is 15% of the income you have free to spend after all your living necessities are paid for. The usual amount garnished is closer to the 10% mark. If you can demonstrate that a garnishment is cutting into your essential living expenses, you may appeal it in court. Unlike garnishments on personal debts with private creditors, student loan garnishments do not require a court writ. The government can begin to garnish your wages without having to go through a formal court process.

On top of the 15% protection barrier limiting how much the government can take, you are also legally entitled to keep thirty hours worth of minimum wage earnings per week. In other words, if your total weekly income is less than thirty hours at minimum wage, the government cannot take any money from your wages. The amount taken should be the lower of the two - 15% of disposable income, or 30 hours at minimum wage. If you want to dispute the garnishment of your wages, you should calculate your typical weekly income and do the sums to figure out how much the government can legally take from you. If you are a casual worker with irregular income, you may also be able to use this factor to help you claim exemption from the garnishment. However, even if you are able to avoid garnishment, you will still be expected to pay your loan off eventually.

You don't have to accept a garnishment without a fight. The government is supposed to send you written warning before the garnishment begins. At this point you can dispute the student loan garnishment on a number of grounds. The most obvious of these is if the garnishment would significantly lower your quality of life and cause you prolonged financial hardship, forcing you further into debt.

The Department of Education is the government body responsible for the collection of student loan payments and enforcing garnishments. You can attempt to contact the department in order to work out an alternative payment plan and avoid a garnishment. The government tends to be a little more lenient than private creditors when it comes to negotiating payments - as long as they see that you have the intention and capability to repay what you owe, they should be open to negotiations.

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