How to stop student loan wage garnishment

Taking out a student loan is a common necessity for most young people going to a college or university. It is often the first time they take out a loan and are approved without having to show an ability to pay it back. Collateral is not required for these kinds of loans. The loan is backed by the government and is made in good faith as well as having a distinct ability to follow anyone for the rest of their lives and possibly garnish wages.

If loans were taken out and things did not work out as well as hoped, a possibility exists that the loans go delinquent. In this case the government backed loan holder will try to get payment by garnishing wages.

When a writ of garnishment is received, a smart thing to do is to contact the party who sent it and see if a payment plan can be worked out. This is possible although not guaranteed.

An attempt to reverse the garnishment is not common, but it is possible. Filing a “Claim of Exemption” form in the court that issued the garnishment is the step to take for this action.

The best route to take is to pay the garnishment off. Once the process is started, it must be resolved one way or another and if the money is available, simply pay it off and the garnishment will be stopped.

Another option is to allow the garnishment to run its course. It will continue until the full amount of the loan is paid off. This may be a hardship for the course of the payment process but will be complete one fine day.

When paying on any such loan or bill of any kind for that matter, always keep documentation of payments made. Make sure your records agree with the records of the party collecting the money. Ask for a payoff amount from time to time to compare records. When the bill is paid off, be sure to get a written receipt that the loan is paid in full.

Read, “If I file bankruptcy will they stop garnishing my wages” and “How to report bankruptcy fraud

Does bankruptcy stop wage garnishment

Wage Garnishment and Bankruptcy

In order to answer the question,” Does bankruptcy stop wage garnishment?” the simple answer is “yes.” However, it is important to note that in some instances, the stopping of the garnishment may be short-lived. Upon the filing of a bankruptcy petition, there is a provision of the bankruptcy code that goes into affect known as the “Automatic Stay.” The Automatic Stay is a court order that protects the debtor from all further collection activity, including wage garnishment.

That being said, the affect of bankruptcy on wage garnishment is truly dependant upon what the garnishment is for. While the Automatic Stay does protect the debtor initially from wage garnishment, such creditors as the Internal Revenue Service, child support recipients, and student loan creditors may file a motion with the court to have the stay lifted in order to continue with the garnishment. If and when approved, such creditors will be allowed to resume the garnishment.

IRS Wage Garnishment and Bankruptcy

While the filing of a bankruptcy petition will initially stop an IRS wage garnishment, it does not automatically mean the debt will be eliminated. The type of IRS debt, whether or not certain conditions are applicable, and the type of bankruptcy filed are determining factors. Typically, with a Chapter 7 bankruptcy, income tax debts may be discharged (eliminated). Taxes such as payroll taxes and trust fund taxes are not dischargeable in bankruptcy. However, the benefit to filing bankruptcy when large tax debts are owed is that interest and other fees will stop accruing.

It is important that debtors immediately notify their employers upon the filing of their bankruptcy petition. In addition, notification to those creditors who may be garnishing their wages should be sent right away as well. If, after the filing of a bankruptcy petition, a debtor’s wages are still garnished and said wages were properly exempted, the debtor may be entitled to a return of said monies. If the wages are not exempt, the bankruptcy trustee may file a motion to have them turned over to the estate for the benefit of all unsecured creditors.

Learn about, “Bankruptcy alternatives