April 02, 2010 - William L. Henry IV
Here is how to stop a student wage garnishment: payoff the balance or file a bankruptcy. Most student loans are guaranteed by the federal government, which means student loan wage garnishment can be imposed against your wages without a court order.
In Colorado, any creditor can get a garnishment against your wages with a proper court order. The difference with federally backed student loans, however, is that no court order is required.
If the federal government is going to garnish your wages without a court order, you do have certain rights. First, you must receive written notice that your wages will be garnished. This notice is sent to your last known address of record.
Second, you have the right to a hearing. The hearing is before an administrative law judge. (You can ask for a hearing after the garnishment begins, but the garnishment will not stop.) The administrative law judge can grant you a payment arrangement.
Third, the administrative garnishment can be up to 15% of your disposable income. Disposable income is your income after all mandatory deductions are taken from your paycheck. For example, a deduction for tax payments would reduce your disposable income.
Student loan companies in Colorado have additional remedies. Instead of pursuing an administrative garnishment, the student loan company can sue you in state court. Once the company receives a judgment, it can garnish your wages up to 25% rather than the 15%.
Bankruptcy can stop a student loan garnishment. Upon filing the bankruptcy petition, the automatic stay is imposed, which lifts the Colorado wage garnishment.
Student loans are a special type of debt in bankruptcy because they are normally nondischargeable. Student loans can be discharged if you can show hardship, which is difficult for most people to show. Simply because student loans are nondischargeable does not mean, however, that nothing can be done. A chapter 13 filing, which is a repayment plan, may help you. A chapter 13 bankruptcy has unique rules that do not apply to a chapter 7 that may allow you to restructure your debt. A bankruptcy attorney familiar with student loans can discuss your options with you.
Robinson & Henry, attorneys at law, maintain office sin Denver, Castle Rock, and Colorado Springs. Contact a bankruptcy lawyer to discuss how to handle your student loan problems by contacting us at (303) 688-0944 or making an appointment online at www.robinsonandhenry.com