Post graduation, paying off student loans provides a great deal of stress to consumers. In our suffering economy jobs are harder to find than ever before no matter what type of degree you carry, and repayment of loans proves more difficult than ever imagined. In fact, last year alone the amount of outstanding student loans surpassed the amount of credit card debt in our county.
Once your repayment plan begins, if you default on your federal student loan, the entire balance of the loan may be accelerated or due in a single payment. After acceleration, the loan is often placed with an agency for collection adding to your expense, as you become responsible for repayment of the principal and interest of the original debt as well as the collector’s costs incurred to collect repayment.
The Department of Education, the entity ultimately responsible for guaranteeing student loans, may obtain repayment by withholding money from income tax refunds. Additionally, the Department of Education can withhold up to 15% of your paycheck without first obtaining a court order. This action, known as an “administrative wage garnishment”, does not require the collector to obtain a judgment in a court of law when collecting on federal student loans. However the collector must still follow prescribed protocol. When a collector intends to garnish to collect repayment of the loan, the loan holder must first send notice of the proposed garnishment and provide you with 30 days to object to the forced repayment. The objection must be in writing, and upon receipt, a hearing will be set up either in person or by phone to present your case. Based on the information provided and the documents submitted a decision whether or not to proceed with the garnishment should be rendered within 60 days.
While the strict guidelines of the Fair Debt Collection Practices Act (“FDCPA”) are applicable in the collection of student loans, with such a large amount of debt looming, debt collectors frequently go above and beyond the letter of the law to collect on debts that no matter the situation must eventually be paid off in full. If you feel your rights have been violated under the FDCPA relating to collection efforts of a student loan, contact SmithMarco P.C. for a free case review.