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Garnishment of Federal Student Loans

On Behalf of | Jul 6, 2012 | Consumer Protection

Federally funded student loans are unlike any other.  With every other debt, the creditor must file a lawsuit against you and win it before they can make any attempt to garnish your wages or attach to any of your assets.  However, with federally funded student loans, the government has the right to start a garnishment without a lawsuit.  However, this does not mean you have no rights when it comes to the collection of these loans.

Debt collectors of student loans will use this sort of information to their benefit to frighten consumers into paying them money faster.  Often, the collectors will say that they can start the process without any legal action whatsoever. Typically, they will make it seem like you will wake up one morning to find your wages garnished with no written warning .  That’s not only incorrect, but it may be a violation of the Fair Debt Collection Practices Act. As with anything else, there’s a process that must be followed before they can take your money, and if the process is not properly followed, there can be no garnishment.

The Collector is Required to Give you Written Notice Advising You of Your Rights Under the Debt Collection Improvement Act of 1996, the U.S. Department of Education must mail you written notice at least 30 days before it begins to garnish your wages.  They must advise you about the nature and amount of the debt, as well as the fact that the agency intends to initiate garnishment.  In addition, the notice must state that you (1) have the right to inspect and copy records, (2) enter into a repayment agreement, and (3) request a hearing about the existence, amount, or current enforceability of the debt, the rate of withholding, and whether you have been continuously employed less than twelve months after an involuntary separation from employment.

What To Do If You Receive A Garnishment Notice If you request a hearing in a timely manner (on or before the thirtieth day following notice of garnishment) then the garnishment cannot not proceed until after the hearing.   While you can still ask for a hearing once a garnishment begins, the garnishment itself won’t stop.  As such, it is critical to get the request for hearing in promptly after receiving it.

Also, the “Request for Hearing” form allows you to choose between a written record, in-person hearing, or telephone hearing.  As such, if personal attendance at a hearing is difficult, you can elect to have it over the phone or have your positions submitted in writing.   A hearing can reduce the amount you owe and delay the garnishment.

Debt Collectors that Collect Student Loans Are Not Exempt from the FDCPA. The Fair Debt Collection Practices Act applies to all collectors that are collecting consumer debts.  That the debt is one that is the governments is of no consequence.  A collector cannot harass or abuse you, call third parties for reasons other than to seek your location information, make misrepresentation or threats to you.  Most importantly, they cannot tell you that you do not have any of the rights as discussed above.

The attorneys of SmithMarco, P.C., a debt collection law firm, has over 30 years of combined experience practicing law protecting the rights of consumers around the country. Contact us for a free case review to determine if your personal debt collection consumer rights were violated