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In this new economy with millions of unemployed workers, many may need to know how to stop student loan wage garnishment. Bills may start to stack up as unemployment levels reach record-breaking highs.
What is Defaulted Student Loan Wage Garnishment?
A student loan goes into default after 270 days of not providing a payment. The U.S. Department of Education will take steps to ensure you pay the loan back in full without delay.
If your loan goes into default, the student loan will no longer become eligible for several federal programs that could have assisted you earlier. No additional financial aid will be forthcoming, either.
Without any other means to collect loan payments, the federal government may start to garnish up to 15 percent of your wages. The government also may keep any tax refunds or Social Security benefits otherwise owed to you.
How to Stop Student Loan Wage Garnishment
The easiest way to stop student loan wage garnishment is to pay off the defaulted loan in full. Of course, this is rarely possible, or the loan would not have gone into default in the first place.
According to the federal government’s website on student loans, the other main options available to people are either loan rehabilitation or loan consolidation.
Loan rehabilitation for either a William D. Ford Federal Direct Loan (Direct Loan) Program or a Federal Family Education Loan (FFEL) Program can stop wage garnishment if you contact the loan holder and sign an agreement that you promise to pay an amount that is equal to 15 percent of your annual discretionary income divided by 12. According to the federal government, “Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size.”
Depending upon your individual circumstances, you may be able to negotiate a lower monthly payment. According to the government’s website, some loan rehabilitation agreements can result in a monthly payment as low as $5.
To qualify for the loan rehabilitation program, you must agree in writing to make nine voluntary and timely monthly payments within 20 days of the due date and to complete nine payments in a period of 10 consecutive months.
After you’ve made the required nine payments, the loan will no longer be in default, and collection through wage garnishment will cease. If you know how to stop student loan wage garnishment and do so successfully, you will be eligible for the benefits that were available to you before you defaulted on the loan.
Loan consolidation is an option for you if you have defaulted on a federal student loan. By entering into an agreement for a Direct Consolidation Loan, you can pay off one or more federal student loans with this new type of loan. In order to do so, you must agree to repay the new Direct Consolidation Loan either through an income-driven repayment plan or by making three consecutive, voluntary, on-time monthly payments in full on the defaulted loan prior to consolidation.
What’s an income-driven plan? These are plans that allow you to pay as little as $0 per month, depending upon your income. Plans include the Pay As You Earn and the Income-Based Repayment plan options. The revised payments may extend your terms to 20 or 25 years, though. And, unfortunately, loan consolidation will not result in the default being removed from your credit history, which could affect your ability to receive another loan or mortgage for seven years.
Can You Apply For Student Loan Wage Garnishment Financial Hardship Assistance?
You may be eligible to apply for student loan wage garnishment financial hardship assistance if you can prove the amount of the garnishment would cause you to suffer extreme financial hardship.
In order to prove such hardship, you will need to submit specific financial details that prove the hardship is insurmountable. Income, expenses and circumstances surrounding your financial situation will be required, in addition to specific forms located on the Department of Education’s website.
How to Find a Student Loan Wage Garnishment Lawyer
If you or someone you know have had your wages garnished because of a defaulted loan through FedLoan or AES within the last six years, you could qualify to participate in this student loan wage garnishment class action lawsuit investigation.
Top Class Actions can put you in touch with a qualified, experienced attorney who can help you determine if you have been the victim of abusive practices by your student loan servicer.
Join a Free Student Loan Wage Garnishment Lawsuit Investigation
If you had had your wages garnished by FedLoan or AES within the last six years, you may qualify to join this student loan wage garnishment class action lawsuit investigation.
This article is not legal advice. It is presented
for informational purposes only.
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