You do have some options to stop the garnishment. If you qualify you can apply for an Income Based Repayment Program directly with the student loan companies or possibly and administrative discharge. If you are interested in this then go to the websites for each company and start the process.
Public Service Loan Forgiveness (PSLF)
If you work full time for a government or nonprofit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you've made 120 qualifying payments—i.e., at least 10 years of payments.
Your loan holder can order your employer to withhold up to 15% of your disposable pay to collect your defaulted debt without taking you to court. This withholding (“garnishment”) continues until your defaulted loan is paid in full or the default status is resolved.
What should I do if my loans were in default prior to the payment pause? The student loan payments pause included a pause of collections on defaulted loans. Collection efforts, including collection calls and wage garnishment, will resume one year after the payment pause ends—no later than September 2024.
Collections (offset and garnishment) on most defaulted loans will stay paused through Sept. 30, 2024, due to the Fresh Start program.
Settle the debt with a lump sum: While few can afford to, you have the option to pay the full amount of your defaulted loan to get out of collections. You might also explore debt settlement, wherein you negotiate with the lender to cancel some of the amount you owe.
Federal loans can also affect your bank account directly. Unlike private loans, the government doesn't need to sue you in court before garnishing your bank funds. However, only a portion of your income or savings can be seized, and certain benefits like Social Security are protected.
Ordinary garnishments
Under Title III, the amount that an employer may garnish from an employee in any workweek or pay period is the lesser of: 25% of disposable earnings -or- The amount by which disposable earnings are 30 times greater than the federal minimum wage.
After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness. After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.
Cancelling student loan debt may reduce unemployment by adding up to 1.5 million new jobs. Federal student loans represent 90.8% of all student loan debt, public and privately held ($1.77 trillion total).
You can make a settlement to deal with the debts subject to the garnishment. You will also deal with other outstanding debts you may have, giving you a fresh financial start. A consumer proposal allows you to keep any assets you own including a home.
The PSLF Program forgives the remaining balance on your Direct Loans after you've made the equivalent of 120 qualifying monthly payments while working full time for a qualifying employer.
The government may take your federal income tax refund if you are in default. Computer records of all borrowers in default are sent to the I.R.S. If you are in default on your federal student loans, all or a portion of your tax refund may be taken and applied automatically to your federal student loan debt.
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
What Accounts Can the IRS Not Touch? Any bank accounts that are under the taxpayer's name can be levied by the IRS. This includes institutional accounts, corporate and business accounts, and individual accounts. Accounts that are not under the taxpayer's name cannot be used by the IRS in a levy.
There are several options for stopping a wage garnishment. One, you can quit your job. Your creditor won't get your money, but neither will you. Two, you can pay the debt in full.
A motion to quash the writ of garnishment asks the judge to nullify its order, to a garnishee, of seizure or attachment of property of a defendant.
Key Takeaways
Your wages will only be garnished if you have officially defaulted on your loans (i.e., you haven't made a payment for at least 270 days).
It may be possible to get out of student loan debt faster through income-driven repayment plans, student loan forgiveness programs, student loan refinancing or student loan consolidation.
Your loan can be discharged only under specific circumstances, such as school closure, a school's false certification of your eligibility to receive a loan, a school's failure to pay a required loan refund, or because of total and permanent disability, bankruptcy, identity theft, or death.