How exactly does Sallie Mae student loan wage garnishment work?
November 3, 2010 by admin
Filed under Student loans
I’ve got a variety of Student loans through Sallie Mae, most of which are in forbearance. My total sum of all loans is about 56k, and I don’t make enough money to pay any on them.
One or two of the smaller ones just went into default status the other day and I’m looking around online and it looks like they may be able to garnish up to 15% of gross paycheck. Is that correct? Is it a flat 15% or could it be less than that?
Also, when some of the other loans’ forbearance expires- will they be able to garnish ANOTHER 15% on top of what’s already being garnished? I live in California.
Thanks for any responses.
It looks like wage garnishment is actually my best option, given the details. My reasoning: my credit is already totally destroyed, so I can’t consolidate. So assuming that they can’t garnish more than 15% of my disposable (as more of the individual loans go into default), that looks like my best option.
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SMiD:
The amount of your income that is subject to administrative garnishment is 15% of your “disposable earnings”. By definition, “disposable earnings” is all of your income that is left after federal, state and local taxes, social security, and unemployment has been removed from your paycheck.
No matter how many student loans you default on, your maximum exposure for wage garnishment is 15%. If it makes you feel any better, federal law allows garnishment of up to 50% of disposable earnings for child support obligations.
Do yourself a favor – negotiate with your lender to reach a mutually agreed-upon repayment plan. The amount that your lender will demand will be less than the amount subjected to the garnishment. I can absolutely guarantee you that your life will be miserable while under a garnishment order – that’s exactly why the threat of a garnishment is so effective.
Do yourself another favor. Don’t underestimate the negative consequence of student loan default on your credit history. By reaching a repayment agreement, you can rehabilitate your loans, and get the black marks removed (permanently) from your credit report. Pay involuntarily, by administrative garnishment, and you will have a near impossible time qualifying for a home mortgage, a car loan, or new credit cards for many years to come. Your existing credit card companies can use the default as an excuse to jack your current rates up to the maximum amount allowed by law, some landlords will not rent to you, and some employers will not hire you.
If I can give you ONE piece of advice – don’t take default and especially garnishment lightly – or just lie down and let it happen, because it seems like the ‘easiest’ thing to do. You can’t fight the debt, but you CAN take voluntary action to get the debt settled in a much more cooperative fashion.
Good luck. (you need it)