January 18, 2019

Strange and Awful Wage Garnishment Power of Student Loan Creditors

unique power of student loan creditorsAre you aware of the special dangers associated with student loan wage garnishments.  Unlike almost every other debt, student loan creditors can garnish your wages without first filing a lawsuit and proving their case in a state or federal court.

Congress issued this gift to the student loan industry several years ago when it authorized something called an administrative wage garnishment (AWG).

An AWG works as follows: if your federal or federally guaranteed student loan has gone into default, the lender (either the U.S. Department of Education or the guarantee agency) will send you a letter giving you a 30 day notice of pending wage garnishment.

This letter will advise you that within this 30 day notice period you can request an administrative hearing before a U.S. Department of Education hearing officer 1. You will not be surprised to learn that most of these AWG hearings result in a ruling in favor of the Department of Education.

If you do not respond to this notice, the lender will contact your employer with an order to withhold 15% of your disposable (after tax) income.

Notice how this procedure provides a significant advantage to the Department of Education.  First, they do not have to sue you and have you served.  They must only notify you by mail.  If you have moved or the letter does not reach you, the AWG proceeds anyway.

Secondly, you have to demand a hearing with one of their employees.  By contrast, in a civil action, a normal plaintiff has the burden of finding and suing you, and if you answer, a trial (judge or jury) will be scheduled many months later before an impartial judge.

Call for Help if You Receive an AWG Notice

If you receive an AWG notice, you must act quickly.  We do have some options – which include setting up an income based repayment plan or asking for a forbearance to avoid the garnishment.

We can help you anywhere in the process, but if you wait until the wage garnishment has started, it is almost impossible to stop it right away.  In such a case we can still proceed with a default cure and income based repayment.

Confused about how to handle an administrative wage garnishment letter – call my office at 770-393-4985.

  1. You have to request your hearing within 15 days if your loan is an FFEL loan.
Jonathan Ginsberg

Jonathan Ginsberg

Attorney at Law at Ginsberg Law Offices
Jonathan Ginsberg has served the Atlanta area community as a personal bankruptcy and student loan debt management lawyer for over 25 years. Contact Jonathan for straight answers to difficult debt problems.
Jonathan Ginsberg
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Jonathan Ginsberg

Jonathan Ginsberg has served the Atlanta area community as a personal bankruptcy and student loan debt management lawyer for over 25 years. Contact Jonathan for straight answers to difficult debt problems.

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