Student loans are getting increasingly difficult to pay, what with the recession and high rate of unemployment. Unfortunately, by law, your current employer must withhold a certain percentage (usually 15 percent) of your disposable income then forward this amount and hand it over to the courts. The court then is responsible for paying the loan company that gave you the student loan. This is wage garnishment.
If you want to end student loan wage garnishment, study the suggestions below.
- Find a way to pay off your student loan. You can try asking a family member or a close friend if they are willing to loan you some money. The loan should be a low-interest one otherwise you will find yourself further in debt. Use the whole amount you were able to loan to immediately pay your current student loan. Hopefully the amount you loaned is large enough to cover the said loan. In case you have some savings stashed away in a bank or under your bed, consider using this to wipe out your student loan. You may lose your savings but at least you don’t have a loan anymore to think of.
- Request for a new payment plan. If you know that you really cannot make the payments specified by the loan company, ask that your loan be restructured. Contact the loan company and set up a meeting with someone from management. Request that the garnishment be discontinued in lieu of an alternative payment plan. Before you sign the new payment schedule, make sure that you can honor your commitment.
- Try paying your total back payment in full. Some lenders will not agree to exchange wage garnishment with a new payment plan. If so, try asking if you can pay all of your back (missed) payments in full in exchange for the removal of wage garnishment. Of course this is assuming that you have the money to cover for all your missed payments.
- Secure loan refinancing. Some financial institutions are able to buy distressed student loans from other lenders. If your lender does not agree to suggestions two or three, then bite the bullet and go to a lender who can buy off your loan. The new lender will now pay off your current student loan held by the original lender. You in turn will pay the new lender. This will stop wage garnishment. Hopefully, you can get a better deal with the new lender – more reasonable interest rate and more affordable payment terms.
- Go to court. Look for an attorney who can represent you and file a Claim of Exemption form. In this form, you will need to specify who your dependents are, your monthly expenses and gross income. You are also required to give a feasible explanation of why you feel that the wage garnishment is hindering you from providing for yourself and your dependents. The attorney representing you will then request for a court schedule where you will go in front of a judge and plead your case.
Reminder: Never ever hide from your lender. This will not help your case a bit. And, request that all agreements be done in writing.
All federal student loans are guaranteed by the U.S. Department of Education. This government agency has the right to garnish part of your disposable income if your student loans are still unpaid. Stopping wage garnishment is not simple especially if you have no financial resources to cover for the loan. Hopefully, you will be able to stop wage garnishment with one of the suggestions above and start anew.