Difficulty in making student loan payments on time is a common problem, especially for college graduates on a budget. When loans are significantly late, some companies will request a writ of garnishment from the courts. When this happens, your employer, by law, must withhold a specified amount from your paycheck and forward it to the court, which, in turn, pays the loan company. If you are in this position, there are ways to stop garnishment, despite beliefs to the contrary. The following steps will help you stop wage garnishment on your student loan.
Instructions
1. Pay off your loan. If you have savings or can get a low-interest loan from a family member or friend, use those funds to pay your loan off in full. This will close your account and end the wage garnishment. If you can pull this off, you may wipe out your nest egg; however, the interest savings over time will be quite substantial, especially if you can earn interest on your savings. If this is not an option, you must contact your lender.
2. Negotiate an alternative payment plan. Contact your lender and ask to speak to someone in management. If you have an agreement in mind you know you can adhere to, ask him or her to stop the garnishment in exchange for your regularly scheduled payments or an amount greater than they are garnishing for. If they agree, offer to sign a written agreement.
3. Pay arrears in a lump sum. If your lender will not simply swap a simple alternative payment plan for your garnishment, ask him or her to provide you the amount that represents your arrears (total of missed monthly payments). If possible, offer to satisfy what you owe in back payments in a lump sum in exchange for a garnishment removal. Again, get such an agreement in writing.
4. Refinance your loan. There are many lenders out there that specialize in buying distressed student loans from other banks. If your current lender will not budge, simply apply for a new loan with another institution. Your new loan will pay off your existing account and stop the garnishment, and you'll start fresh with the new bank. You may also qualify, regardless of your credit history, for a better interest rate and more affordable terms (see Resources).
5. Petition the court. No court in the land will leave you unable to pay your utility bills, to pay your rent or to feed yourself and your dependents as long as you are employed and making a solid effort to pay your bills. If your lender refuses to work with you, contact an attorney and have him or her file a Claim of Exemption form with the court. On this form, list your dependents, monthly expenses, gross income and a viable explanation of why the garnishment is hampering your ability to provide for yourself or your family (see Resources). Once the claim form is filed, your attorney will schedule a date for a hearing, at which he or she will explain your case to a judge.
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