The Internal Revenue Service (aka: “IRS”) has the power to garnish wages in order to collect federal taxes owed. A “garnishment” means to collect a monetary judgment. The IRS also has the authority to levy bank accounts, seize property and/or other assets, but there are specific guidelines the organization must follow. Delinquent tax payers who are aware of these guidelines may be able to slow down or stop a garnishment procedure.
Tax wage garnishment occurs when the tax payer fails to follow IRS repayment guidelines. Some of the reasons a tax payer may experience a garnishment or levy include:
- Filing taxes late;
- Filing an incorrect or fraudulent tax return;
- Ignoring letters from the IRS;
- Not adhering to previously made payment arrangements.
The student loan wage garnishment process is quite similar to tax garnishments. However, the maximum amount allowed for a student loan wage garnishment is 15% of a default borrower’s disposable income. In some states, lenders can garnish as much as 25% of wages. In addition to wage garnishment, student loan lenders are also entitled to garnish as much as 100% of tax refunds for both state and federal taxes to compensate a default student loan.
If you are currently in default on student loans or concerned you are susceptible to student loan default, now is the time to do something about it. Our firm is experienced at assisting borrowers in default to stop garnishments of wages and/or tax refunds. The process typically takes between four to six weeks. What’s even better is monthly student loan payments are also often reduced alleviating the debtor’s financial obligation quite substantially.
Although student loan debt cannot be dismissed, there are solutions to get your finances under control.