Unpaid Student Loans = Garnished Wages
July 15, 2008 – 6:20 am
A college education can be a wonderful thing, but paying off college debt can be a nightmare. Even with historically low interest rates the large balances that most people have require years of payments. Every time I think about my student debt I recall a book I saw once called “Debt Free By 30!”. I’ve never read the book, but the title always makes me think “only if my parents had paid for my college!”. 
Regardless of where you are in your debt snowball or debt repayment plan, I’d like to point out that if you default on your student loan they can garnish your wages without even taking you to court. I’m not an attorney or financial planner, but I’ve read that a student loan creditors can simply mail a letter to your company and require that your wages be garnished in order to pay back your student loans. I’ve also read that the amount they can take from your check varies based on the laws in your state, but that 15% (net income) is typical.
I don’t know about you, but losing 15% of my net income would be a budget killer. So please, don’t get behind on your student loans if at all possible! And if you are unable to make the payments, but the loans on hardship deferral or make some other kind of arrangement with your lender before they take a big bite out of your paycheck.
More information can be found here.
Image Credit: Northern Xander
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2 Responses to “Unpaid Student Loans = Garnished Wages”
I also heard that student loans will haunt you even if you declare bankruptcy, unless you can show that they create undue hardship on you or your family.
By DoneToZen on Jul 15, 2008
Don’t know about the Bankruptcy/Hardship thing, but can tell you for a FACT that even having Cancer will NOT keep these people from getting any money you may owe. I have read..however..that it is EXTRMELY difficult to prove any type or kind of “Undue Hardship”. As of yet I have NOT been able to find even one case in which this has been .. true..?
It does stand to reason that should the Courts set a presenence of Allowing this..the Government..might not get more Money to…Waste. Good Luck and I do “Wish” you well!!!
By Roy Donovan on Sep 7, 2009