Student Loan Administrative Wage Garnishment - They Can Do That?

Amongst the most misunderstood concepts of student loan default is the Administrative Wage Garnishment (AWG). A wage garnishment is the involuntary deducting of money from an employee's wages to repay a debt. Usually, a wage garnishment cannot take place unless a creditor files a lawsuit and obtains a judgment against the person who owes the debt.

This is not so with an Administrative Wage Garnishment. Here are some facts about AWG:

  • If you default on your federal student loan(s), the government can commence an AWG without a lawsuit or a judgment from a court.
  • The government can typically take 15% of your disposable pay, per pay period, towards the repayment of your defaulted student loan(s).
  • The government must send a notice 30 days prior to ordering a wage garnishment, which gives the borrower an opportunity to either enter into a voluntary payment arrangement or object to the garnishment (if a legal defense applies) and request a hearing.
  • If an AWG has already begun and no legal defenses apply, then by entering into a Rehabilitation Agreement and making five rehabilitation payments, the garnishment will be suspended.


The best way to avoid an AWG is to avoid default of your federal student loans in the first place. If it appears that you will not be able to keep up with your federal student loan payments or if you just started missing your payments, be proactive. There are a number of repayment options that are based on a borrower's income. Switching your repayment plan to one of those plans can avoid an imminent default.

If you already are in default of your federal student loans, there are many opportunities to get out of default, before an AWG begins. Most borrowers in default have the opportunity to get out of default by consolidating their federal student loans and then immediately selecting one of the aforementioned income-based repayment plans.

If you or someone you know are faced with an AWG of your federal student loan(s), want to avoid an AWG before it happens, or are simply overwhelmed by student loan debt, allow us to demystify your student loans and put you back in control. Please keep in mind that every student loan matter is different. If you would like a shining light to guide you through the student loan debt morass, please contact Leiderman Shelomith, P.A. to schedule a no-cost initial consultation.
Case Study

A recent student loan client retained our firm only days before an AWG was going to be implemented. Before consulting with us, she did not understand that the government could garnish her wages without even filing a lawsuit against her. She came to see us 28 days after the mailing of the notice of AWG. She searched for help, but did not know where to turn before speaking with us. We acted quickly, provided the collection agency with financial information, and were able to enter into a voluntary repayment arrangement that avoided the AWG.

Thereafter, we assisted our client in consolidating all of her federal student loans into a new Direct Consolidation Loan, where she selected an Income Based Repayment (IBR) plan that she was able to afford on a monthly and ongoing basis.

Our client was thrilled that her federal student loans are now out of default and in good standing.

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What About Private Student Loans?
AWG is a remedy available to the government when a borrower has defaulted federal student loans. The government has other remedies available, as well, such as tax refund offsets, federal benefit offsets and lawsuits. However, what about private student loans?



Private student loans are not funded or subsidized by the government; instead, they are funded by banks, credit unions or other types of lenders. While private student lenders typically do not offer income-based repayment plans or flexible options for borrowers in default, the powerful administrative remedies available to the government for defaulted federal student loans are not available for private student lenders.

There is no such thing as an AWG for a private student loan. A private student lender must commence a lawsuit and obtain a judgment before commencing a garnishment, and even then, there are state-law exemptions available to certain borrowers.  

At Leiderman Shelomith, P.A., we represent borrowers of both federal and private student loans, including defending borrowers who have been sued by their private student lenders.
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About Leiderman Shelomith, P.A. 

 

Leiderman Shelomith, P.A. was founded by Jonathan Leiderman and Zach Shelomith in 2003. The firm quickly built an excellent reputation across South Florida as a boutique bankruptcy law firm, handling both personal and corporate bankruptcy matters, including Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, as well as state court Assignments for the Benefit of Creditors. Felipe Plechac-Diaz joined the firm as an associate attorney in 2014.  The firm began representing borrowers with their federal, state, and private student loan matters in 2014, including the defense of student loan lawsuits.

 

The firm's attorneys, who have 38 years of combined legal experience, have been recognized as a South Florida Legal Guide Up and Comer, a Super Lawyer Rising Star for the State of Florida, a Florida Legal Elite Up and Comer, and a Florida Legal Elite. Our attorneys are members of the National Association of Consumer Bankruptcy Attorneys, the American Bankruptcy Institute, and the Bankruptcy Bar Association for the Southern District of Florida, among other organizations. The firm's attorneys are also frequent lecturers at seminars and community programs, speaking about bankruptcy law to attorneys and the general public.

 

The firm, Mr. Leiderman, and Mr. Shelomith, are AV� Preeminent Rated Attorney's, awarded by LexisNexis� Martindale-Hubbell�, for having obtained the highest possible peer-review rating for their ethical standards and legal ability.

 

The firm represents debtors, creditors, and bankruptcy trustees in all aspects of bankruptcy cases, including litigation and appeals, handling both liquidations and reorganizations. The firm also represents borrowers in all aspects of student loan law, including federal, state, and private student loans. Our office is conveniently located in suburban Fort Lauderdale, Florida, and is easily accessible from anywhere in Miami-Dade, Broward, and Palm Beach Counties. We handle bankruptcy debtor cases across the Southern District of Florida, particularly in Broward, Miami-Dade, Palm Beach, and Monroe Counties, and other bankruptcy cases and student loan matters throughout the entire State of Florida.

 

Disclaimer 

 
The information you obtain in this newsletter is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters, and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.