My federal student loan has recently gone into default. A collection agency has threated to garnish my wages, unless I make payments that I could not afford. I do however want to give them something. I have set up a payment program with them for a more reasonable amount and as soon as I started paying they immediatley garnished my wages. When I called them they said they have to do this for 9 months, in what they are calling a rehab program, in which they will garnish 15% of my wages even though I am making payments. When I calcualted my check it is like 24.5% being garnished( I live in MIchigan). I may not have the money to pay them what I agreed upon now. I have mortgage and other bills to worry about.
2007-12-02 23:13:40 · 4 answers · asked by nye20 2 in Business & Finance ➔ Credit
Here is the law regarding garnishment
Maximum allowable garnishment
Except as provided in subsection (b) of this section and in section 1675 of this title, the maximum part of the aggregate disposable earnings of an individual for any work week which is subjected to garnishment may not exceed
(1) 25 per cent of disposable earnings for that week, or
(2) the amount by which disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 206(a)(1) of title 29 in effect at the time the earnings are payable, whichever is less.
In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2).
If you have any other monthly payments such as child support or other collections due, this would lower you monthly discretionary income and may reduce the payment amount on the garnishment.
2007-12-03 01:08:31 · answer #1 · answered by Sgt Big Red 7 · 0⤊ 1⤋
Well apparently so, eh. They've done it. Actually, anyone you owe can garnish your wages if you are in default and they have a judgement against you. If you're not sure of the legal limits of garnishments, speak to someone in the payroll department where you work. They can most likely advise you.
Student loans are one of the first things a person should begin paying off ASAP after they finish school. It always amazes me that people have "other bills to worry about" and don't even consider the student loan to be a bill. As you've seen, they can garnish your wages, withhold your tax refund, pretty much get it by any legal means. The sooner you pay this off, the better.
2007-12-02 23:27:06 · answer #2 · answered by ~RedBird~ 7 · 1⤊ 0⤋
They can and will. It is likely 24.5% after taxes and deductions and 15% before. My suggestion would be to increase income/assets by maybe getting part time job or asking for raise. Getting the debt paid off asap may put a strain on your bank account but will feel better in the long run when you pay off the debt faster. Hang in there!
2007-12-02 23:32:42 · answer #3 · answered by jjungema 2 · 1⤊ 1⤋
Have you tried to consolidate your loan with another company? Then you could make arrangements with them for a lower amount.
It is worth a try,
Alicia
2007-12-06 07:31:47 · answer #4 · answered by Anonymous · 0⤊ 1⤋