If you have defaulted on your student loan and face wage garnishment from the government, you’re in the right place. We can give you some information on wage garnishment laws so you’re better prepared and know what to expect. If you have not yet defaulted on your student loan, but are in danger, you’re in the right place, too. It’s important to know every possible outcome so you can work harder to prevent the bad ones from happening.
To begin with, a loan will only default after nine months of missed payments. This is the point when serious consequences will start occurring. We can use Lloyd as an example. Lloyd defaulted on his student loans a few months back. He had not intended for this to happen, just like anyone who defaults. Lloyd had the happy news of his wife having brought their first-born child into the world. Happy times were waiting for Lloyd and his new family. Lloyd was making fairly decent wages at the local pharmacy.
Of course, fairly decent wages does not constitute life-long prosperity; far from it. New babies cost thousands of dollars, and Lloyd was falling into debt, slowly but surely. His student loans had long been forgotten in order to prepare for the expenses of a newborn.
After he defaulted, Lloyd started to panic. He knew that wage garnishments could be coming, or worse. Wage garnishments will only occur on defaulted loans. It is a tactic used by the government to ensure payment begins again. There are limits to these garnishments. For instance, the government can only take up to 15% of a person’s paycheck to pay the student loans every pay period. However, this is a hefty chunk of money for even middle-class citizens, let alone those struggling from paycheck to paycheck, as Lloyd was.
Lloyd was notified thirty days before the garnishment could begin, as it will for every person facing such consequences. The government is required to give notice of when the wage garnishment will occur and how much will be taken. They must also propose options for the person to take to avoid the garnishment and begin repaying their student loans. Lloyd received all of this information, but was in no position to do anything about it.
This is where many of you may find yourselves. Remember, there are options available to you. The best one would be to set up a repayment plan with your loan servicer that is better suited to your current level of income. It may take longer to repay, and interest will accrue over this time. Yet, the monthly payments could be lowered, and you won’t be drowning as you were with the standard repayment program. Check out some of the other stories or web pages on this site for further information. There’s always a way out.