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How to Stop and Protect Yourself From Student Loan Garnishment

You can stop student loan garnishment by managing the situation effectively.

Typically, you’ll have ten years to pay off your student loan debt. For many people, however, this isn’t an option.

If you don’t make payments on your student loan debt, your account goes into default. If this happens, there are several options that the federal government can pursue to recover the loan – including wage garnishment.

Student Loan Garnishment

Student Loan Garnishment

When the government garnishes your pay, it can take up to 15% of your income to recover your loan debt. If you think that you can live with 15% less of your income, allow it to continue. If not, read on to find out what you can do about a student loan garnishment against your pay.

Are You Afraid of the Case of Student Loan Garnishment? 

Most Americans live on a tight budget, and it doesn’t help things when your paycheck comes up short. It’s highly unpleasant to open your paycheck stub and find out that a creditor is garnishing it for an unpaid student loan debt.

If you’ve been wondering how to stop a student loan garnishment, you’ve come to the right place.

More than likely, you need it to stop – and fast. Most people, however, aren’t sure where to begin.

Unfortunately, student loan debt doesn’t just disappear. The longer the debt stands, the worse the situation gets.

If your account is over 90 days delinquent, the lender will report it to all three major credit bureaus. If your account is more than 270 days delinquent, it will go into default, which also goes on your credit reports.

Bad marks on your credit make it hard to do essential things, such as find an apartment, manage your finances or buy a house or a car. Accordingly, you need to resolve the matter as quickly as possible.

Starting the Process: Communication Is Key

There are a few ways for you to deal with the situation. One option is to request leniency due to financial hardship.

Many people live from check to check. You’ll have to contact the lender and explain that this is your situation.

On a tight budget, any shortage of pay can cause big problems. Problems are what you’ll have if a lender garnishes your paycheck with an already tight budget.

Accordingly, you must explain to the lender that the garnishment will cause you and your family financial hardship. Hopefully, they’ll choose an alternative course of action.

Financial hardship means that you can’t pay for essentials such as housing and food. You’ll have to prove to the creditor that the garnishment will prevent you from providing for your family.

It’s important to note that you must prove this within reason. The agent that you speak with will compare the living expenses that you claim against the IRS National Standards for Allowable Living Expenses.

Another reason that you can present to lenders is the recent loss of a job. If you were recently laid off or fired, you can request that the lender lift the garnishment.

You’ll have to do more, however, than call your lender and tell them that your employer fired you. It’s your responsibility to prove that your employer terminated your employment. Therefore, make sure that you’re prepared to back up your claim before you make the call.

You’ll have to fill out a hearing request form. On the form, you must state that you lost a job within the last 12 months to pursue this request.

Getting Back on Track

If you take the first step and contact the lender, they’ll more than likely try to help you. However, if you do nothing, you leave them with no choice but to continue with the garnishment. Communication can help you get the garnishment lifted and pull your account out of default status.

It’s important to note that rehabilitating your student loan debt account takes time. Typically, you’ll need to make nine payments in ten months. You mustn’t miss a payment during this period.

If these methods fail, you may need to hire a lawyer to help you file for Chapter 7 or 13 bankruptcy and stop the garnishment. For some people, this last resort action makes sense.

If you successfully file bankruptcy, the lender must stop the garnishment. Bankruptcy qualifies you for an automatic stay. An automatic stay protects you from creditors.

As a long shot, you can simply ask the lender to lift the garnishment. Merely asking, however, isn’t the most persuasive tactic. However, if you don’t ask, you’ll never know.

Alternatively, you can ask to make voluntary payments in place of the garnishments. This request is also highly unlikely to succeed, but it’s more likely to work compared to asking them to lift the garnishment without providing another funding source.

A Brighter Future Ahead

When you default on your student loan, creditors can go to court to attach your pay. First, however, they must apply for a court date, serve you and allow you to defend yourself.

Fortunately, a creditor will prefer to allow you to recover your account before this happens. Also, there are laws to protect you and limit the power of creditors.

The most important thing to remember is that you must act. A wage garnishment will not go away on its own.

We Have the Answers

Lenders provide funds so that you can earn your education, but they’re in business to make money. They have to collect funds owed. A student loan garnishment is an effective means for them to meet that end if all other methods have failed.

If you feel overwhelmed in trying to recover your account, it’s time to reach out for help. In some instances, the lender may employ a collector that makes the entire experience unbearable.

Don’t give up! Click here to learn more about how to protect yourself if a lender garnishes your paycheck.