What Happens If You Lose Your Job & Have a Student Loan Garnishment?
Losing your job hurts your ability to meet your financial obligations and may damage existing payment arrangements with creditors. If your debts involve student loan garnishment, losing your job could mean a trip back to civil court to answer a lawsuit from a student loan lender. If your creditor is the federal government, a continuation of your wage garnishment may be unavoidable.
Other People Are Reading
-
Unemployment Benefits Garnishment
-
Losing your job through no fault of your own may allow you to apply for unemployment benefits to provide you with temporary aid to meet your financial obligations. These benefits are usually exempt from garnishment, meaning an existing garnishment order for a defaulted student loan cannot legally carry over. Your former employer must inform your student loan lender that your employment has ended and that the previously established garnishment order will cease. Contacting your lender to ensure your job status information remains updated can ease tensions while you search for new work.
Returning to Court
-
If your garnishment order pertained to a private student loan debt, the lender must return to court to obtain a new garnishment judgment against you once you find new employment. You don't have to appear in court for a second time if you don't wish to fight the garnishment order. Appearing in court is a requirement if you wish to object to the lawsuit and provide evidence that a garnishment order would significantly impact your ability to meet other financial obligations and pay for basic life necessities.
-
Resuming Collection Practices
-
Losing a garnishment order may cause your student loan lender to resume other collection practices while a second lawsuit against you is in process. The lender must still comply with the Fair Debt Collection Practices Act when contacting you regarding the debt and refrain from abusive or threatening language. Additionally, the lender may only legally contact you between the hours of 8 a.m. and 9 p.m. regarding the defaulted student loan. You may inform the lender in writing that you no longer wish to have contact with the lender regarding the debt. The lender must comply with this request per federal law.
Federal Student Loans
-
A lender with a student loan guaranteed by the federal government does not have to sue you in civil court to obtain a judgment order to force you to repay the debt. According to the U.S. Department of Education's Federal Student Aid website, the Higher Education Act allows the lender to contact your employer directly with an administrative order for garnishment. Even if you lose your job, all the lender has to do is wait for you to find gainful employment again and contact your new employer to reestablish the garnishment order.
-
