The U.S. Department of Education, which guarantees federal student loans, can garnish up to 15 percent of your disposable income without filing a lawsuit. The agency must, however, provide you notice of the garnishment and give you an opportunity to be heard if you request it. Stopping wage garnishment for defaulted student loans is difficult, but not impossible. The best protection against wage garnishment is to prevent a default.
Request a hearing. Complete the "Request for Hearing" form included in your notice of wage garnishment (see Resources below). With this form, you can elect to have the documentary records reviewed if you feel the default is an error or you can request an oral hearing to present your case directly. The grounds for stopping garnishment are included on the form; check all that apply.
Complete a financial disclosure statement. Also complete the three-page financial statement included with the garnishment notice. If you choose, you can use an alternate form of your preference to disclose your finances, but all the information requested on the official form must be included.
Submit forms within 30 days of receipt. Returning the two forms described above within 30 days of receiving them will prevent the garnishment from going forward until either the hearing is conducted or the documentary records are reviewed. Otherwise, the garnishment will begin and continue unless you are successful in your hearing.
Attend the hearing, if applicable. If your hearing request contains a good reason to conduct an oral hearing of your case, you will be notified of the date, time and location of the hearing.
Tips & Warnings
- If you defaulted on private student loans, the lender cannot institute a garnishment without first filing a lawsuit against you. Consult with an attorney for advice on the best way to fight the lawsuit and prevent a judgment being entered against you on which a garnishment can be based. One option may be to request a deferment, which postpones the period you have to repay your student loan, or a forebearance, which allows you to reduce the amount of your monthly payment.
- Student loans are virtually impossible to discharge in bankruptcy.
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