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How to Stop Student Loan Wage Garnishment

How to Stop Student Loan Wage Garnishment

Student loan garnishment can break the budgets of many low income families. Ignoring your student loan debt is the absolute worst thing you can do, especially when you can’t afford your student loan payments. Eventually, the money will be recovered by garnishing your wages or even your tax returns!

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Fortunately, there’s a better way. You can prevent student loan wage garnishment by signing up for one of several income based repayment plans. Low income student loan borrowers can sign up for payment arrangements that offer very low payments (some as low as $0/month!) and eventual loan forgiveness.

However, if your wages or taxes are already being garnished, it isn’t that simple. The court has already authorized the company to collect on your wages. Although it is certainly possible to stop it, you will face an uphill battle trying to convince them to stop your student loan wage garnishment.

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What is a student loan wage garnishment?

Wage garnishment occurs when your employer deducts money from your paycheck to pay a debt. This can only happen when you owe child support, student loans, back taxes or a court judgment has been rendered against you. There are limits to how much of your earnings may be garnished per paycheck.

Despite many claims to the contrary, employees can legally be fired for garnishments in certain circumstances. In Washington State, you cannot be fired for a single student loan wage garnishment… but you can be fired if you are garnished for more than three debts in a twelve month period.

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If your wages are currently being garnished, you know what a pain that can be. What you probably don’t know is that you can reduce the amount of money that is being taken from you – and you may be able to stop the garnishment altogether!

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There are three ways to stop student loan wage garnishment.

1. Contact your loan servicer to rehabilitate your loan and enter an income based repayment plan.

Although stopping the garnishment isn’t as easy as preventing it, it is still very possible. It all starts when you call your student loan servicer to discuss your options.

If you are low income, point out that you qualify for one of the income based repayment plans and that you were unaware of this option when you fell behind on your payments. These repayment plans can cost as little as NOTHING every month and include eventual debt forgiveness. No joke!

You may need to rehabilitate your loans in order to pursue an income based repayment plan. Rehabilitation requires you to make nine affordable monthly payments on time over the next ten months. Your rehabilitation program repayment could be as low as $5 per month!

Under the rehabilitation program, the payment amount is 15 percent of your discretionary income. Your discretionary income is the difference between the adjusted gross income on your last tax return and 150 percent of the Federal Poverty Level for your state and family size. If this payment is too large, your loan servicer may allow you to negotiate an even lower payment based on your monthly expenses.

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2. Consolidate your loans.

The first suggestion many websites will give you is to consolidate your loans. However, this is not as easy as it seems because you cannot consolidate until the wage garnishment order has been lifted or the judgment has been vacated.

The easiest way to get the garnishment order lifted is to rehabilitate the loan.  You will have to make on-time payments of $5 or more per month (payments vary based on income) for nine months before the loan is fully rehabilitated. These $5 payments are in addition to your wage garnishments during that time.

However, once that 10 month period is over, you can consolidate your loans and enter an income based repayment plan that could have payments as low as ZERO dollars per month with eventual debt forgiveness.

3. File bankruptcy.

Bankruptcy is ugly. It cannot erase student loan debt but it can destroy the next decade of your financial future. If the first two options fail, you still need to exercise extreme caution before proceeding with this third option.

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Bankruptcy can help with student loan garnishment because it protects you from garnishments and federal benefit offsets while the bankruptcy is in process. When the process is complete, unresolved garnishments can start up again… so you will need to work with a qualified attorney to negotiate repayment terms with your loan servicer during this period.

Like I said, though, bankruptcy is a drastic step that has a very minimal benefit. In my opinion, it is much wiser to rehabilitate the loan, consolidate the loan or renegotiate the garnishment amount.

You may be able to reduce the amount of money that is being taken by student loan wage garnishment.

The laws of each state dictate how much money can be taken by wage garnishments. However, sometimes employers make mistakes and take more money than they are supposed to in the garnishments.

For example, a certain amount of money is always exempt from garnishment. That means the garnishment can’t touch it. In Washington State, an employee is allowed to keep the greater of either 75% of their disposable earnings or 35 times the federal minimum hourly wage.  The garnishment can never exceed 25% of the paycheck.

If you are concerned that the garnishment amount exceeds legal limits, you will need to contact the person in charge of payroll at the business you work for. They should be able to help you confirm the validity of the garnishment amounts. If there is a problem, you will need to seek the advice of qualified legal counsel.

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Have too much month at the end of your money? Me too - and that's how Low Income Relief got started. I have over 20 years of professional research and writing experience. Over the years, I've worked as a novelist, journalist, ghostwriter and content creator. My work has been featured in various print and online publications, including USA Today, eHow.com, Livestrong.com, Legal Beagle, The Daily Herald (Provo, Utah), The Chronicle (Centralia, WA) and others. At Low Income Relief, I use my professional research and reporting experience to help low income families save money and make ends meet. It's been my full-time job since 2016, and it's truly an honor to serve you.

tami

Sunday 27th of January 2019

My wages have just started being garnished; the check i received Friday January 25 was my third week of the garnishment (student loans). My original loan was only for around ONLY $3000 the rest, might I add, is ALL interest--$10,000. I was beginning to work with someone but now I can no longer get hold of them; their phone has been continually busy for the past 3 weeks, and I sure call every day and every night. My whole issue with this whole ordeal is that I am very overwhelmed and really need the help; help with what exactly to do and/or where to go. I can barely live on what I make at this time and am just ready to pull my hair out and scream at everyone I see. Can you help in any way????? PLEASE!!!!!!!!

Riley Thomson

Friday 1st of February 2019

Tami, You could try writing a formal letter in business format and mailing it to the company. Calling never seems to work. I hope this helps. -Riley