Can I Still Make Payment Arrangements After Wages Are Being Garnished?
Wage garnishment typically occurs after you default on a debt obligation and the lender has exhausted all other methods of collecting its money. However, because the chief concern of lenders is the collection of outstanding debts, you may have payment arrangements that you can make after wage garnishment if you can prove to your lender that you have the ability to consistently make payments on time.
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Loan Rehabilitation
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Some lending institutions offer a loan rehabilitation program that lets you get your loan payments back on track. If you consistently make on-time payments, the lender lifts your wage garnishment and lists your loan as "current" in its books. In addition, loan rehabilitation programs can bring your loan status back to "current" on your credit report, improving your credit rating. You must usually make a "good will" payment that equals a certain percentage of the debt owed to enter loan rehabilitation. For example, if you have a student loan of $10,000, the government might ask you to pay ten percent of the total upfront, and a few hundred dollars every month for a specified period of time. The agency would then lift your monthly wage garnishment if you made these payments.
New Payment Plan
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Certain lenders might offer a new payment plan for your loan if you can demonstrate your ability to make consecutive monthly payments. After you make a certain amount of consecutive payments, the lender will discontinue wage garnishment. Unlike loan rehabilitation programs, however, new payment plans typically do not repair your credit. Negotiating a new payment plan is still beneficial to your financial situation because wage garnishment typically takes between ten and twenty-five percent of your income every month. If you negotiate a new payment plan and consecutively pay your monthly loan payments, your monthly loan expenditure might be less than ten percent.
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Debt Negotiation
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Depending on your financial situation, you might have the option of negotiating your debt to a lower, more manageable amount. For example, if a civil court ruled that your wages should be garnished, but you do not have a job or the way in which you are paid makes garnishment impossible, lenders might consider debt negotiation. Wage garnishment can only occur when you work for a company by the hour or for a salary. For example, if you are an independent contractor or freelance worker, you typically cannot have your wages garnished. Because the lender would not receive any money from wage garnishment in this case, you may be able to negotiate the debt. In the eyes of the lender, some money may be better than no money. Negotiated debts are typically less than the original amount you owed and you must pay in full immediately. For example, if you owe $4,000 to a lender, you could possibly negotiate to pay an immediate lump sum of $2,500 to pay the debt in full.
Considerations
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Never agree to a payment arrangement or begin new payments without first receiving the new agreement in writing from your lender. If you do not have a written agreement, and the lender decides to back out of the payment arrangement, you might end up making payments on your loan in addition to your wage garnishment.
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References
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