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Summary: For decades I had my student loans paid by automated payment from my bank without a problem; just take it out of my bank and there's a small benefit in interest for it.

Recently, my current employer showed me that there was a collections office who would take 15% of my salary and if they did not 'okay' it, there could be legal ramifications. The office naturally had to sign it. Now 15% of my salary is being removed by this collection agency.

Background: This part of the Federal student loan had become part of a separate agency and as I was not paying it, it defaulted two years ago without any notification to me.

I am happy to pay for the last fifteen years, and I understand it should have been my responsibility to notice my automatic withdrawals had a different amount (?) from my set-aside account for those payments, but the surprise is sudden and with ten days notice, I've received no movement other than now my salary is being taken by a draconian amount without me signing a single thing other than the original loan in 2005ish.

Does this sound legally dodgy?

As in I should seek representation, or is this status quo and if phone and mail conversations are resulting in no change, it is something generally accepted by other people in my situation.

My question isn't necessarily about my employer going along with this nor about how I feel about the student loan (I of course have always endeavored to pay my debts), but whether this is a legal issue based on my summary.

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Defaulting on student loans is—along with back taxes and child support—one of the three cases where a court order is not required for wage garnishment.

This article spells out remedies against such defaults. For example, they can intercept your tax refund, Social Security payments, or your wage. They can take up to 15%, but not more than 30 times the federal minimum wage. So yo don't need to have signed a single thing other than the original loan agreement.

That does not guarantee that your particular situation is iron-clad, but it is not obviously legally improper.

The only way to be sure is to hire an attorney to fight the garnishment. A brief initial consultation is probably free.

  • Thanks - that is exactly my question. I want to always pay, I just felt that this suddenness was, well, sudden, and if I should speak with legal representation. I'll have a quick consultation and weigh options. – Mikey Apr 12 at 15:02
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    "not more than 30 times the federal minimum wage" What does this mean? The minimum wage is dollars per hour. A garnishment is just dollars. – Acccumulation Apr 12 at 19:13
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    It's complicated as explained by Dept. of Labor here: dol.gov/whd/regs/compliance/whdfs30.pdf. It is based on "disposable earning" which is earning minus legally required deductions. Normalize earnings into weekly pay. Find the lesser of disp. earnings, or the amount by which an employee's disposable earnings are greater than $217.50 (currently) = 30*7.50. The wage figure is basically an index into "cost of living". – user6726 Apr 12 at 19:29
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    @Acccumulation "A garnishment is just dollars"--why do you say that? Surely a garnishment is dollars/week, dollars/month, or dollars/pay-period, so compatible units to minimum wage? – prl Apr 13 at 3:19
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    So they are protecting people making 200 times the minimum wage? (Because 15% would be 30 times the minimum wage). – gnasher729 Apr 14 at 14:55
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If this is a federal student loan, I would check with the U.S. Department of Education to make sure you have any federal loans in default and what agency is servicing them.

If it is a case of federal loan default, there is little legal recourse other than trying to return the loan to good standing.

https://studentaid.ed.gov/sa/repay-loans/default

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