After graduation, you were able to make regular payments on your student loans. Unfortunately, things took a turn and you had to change jobs. The 30 percent pay cut you took has made it difficult to keep up with your living expenses and your loan payments. You had to make a choice a between paying rent and paying on your student loans. Rent won out. Now, you are more than six months behind on your payments and the lender has started garnishing your wages.
Your circumstance is not uncommon. There are several situations that can result in wage garnishment. In addition to student loans, people that get behind on back tax payments, child support and personal loans are at risk of wage garnishment. Wage garnishment is a legal procedure that creditors can use to recoup outstanding loan payments. It is usually considered a fairly severe consequence, but it is possible to fight wage garnishment. An experienced attorney in the Memphis area can help you choose the best debt relief option for you.
When is wage garnishment legal?
In order for a lender to garnish your wages, it must schedule a meeting with the court. It is also a requirement that the lender notify you of the time, date and place of the hearing. In addition, the lender has to be able to prove to the court that you owe the money and that you have not made the required payments. If the court agrees with the lender’s position, then it will issue an order to your employer to hold back a portion of your wages. Typically, your employer should have notified you in writing that the garnishment was about to begin.
In general, a garnishment will stay in place until the debt is paid off. However, there are protections in place to prevent you from becoming impoverished while you are repaying your student loans. There is a limit on how much the lender can garnish from your wages. According to the Consumer Credit Protection Act (CCPA), a garnishment from a federal court cannot be more than 25 percent of you disposable earnings per week. For people that owe on back child support, the garnishment can be as much as 60 percent of disposable income.
Unfortunately, the calculation of disposable income does not include your living expenses such as rent, groceries and health insurance.
Will I be fired from my job?
Another protection that you are entitled to is that your employer cannot fire you for having your wages garnished to repay a single debt. However, if your wages are garnished for two or more debts, you employer can fire you without violating the federal protection.
While the best way to avoid wage garnishment is to continue making your student payments on time and in full, sometimes circumstances are out of our control and it is not possible. If a lender is garnishing your wages to repay a student loan, it is important to understand your rights and options.