Anybody ever had their pay garnished?

[Myrina]

I am currently in heated discussions with NCO, the collections agency for the Dept of Ed on my student loans.

They want me to make monthly payments of $500 or cough up the total due ($62k), or they’re going to send me to garnishment.

How I got here is a long story, but suffice it to say that I cannot spare $500/mo.

I was reading the Dept of Ed’s website and they state that garnishment for Student Loans maxes at 15% of disposable income (defined as gross pay – all taxes), and that when served with a garnishment notice, the debtor can claim financial hardship and request a hearing to have that % lowered.

Ok, that sounds tolerable.

What I am wondering, is if there are other problems (aside from the stigma) that one experiences from being garnished? NCO has led me to believe I will be garnished for the rest of my life, wherever I go, tax refunds intercepted, and basically I will rue the day.

I am in a home and have a decent vehicle so am not looking to buy either anytime in the next 10 years: “credit power” isn’t a concern to me.

I know they have quotas to close out accounts and take in as much money as possible, so
is she just trying to shake my cage with all the doom and gloom, or is this really not something I want to deal with?

[TwilightGardener]

1. You have a house and a car, but can't repay your student loans?

You couldn't arrange lower payments, or a hardship deferment, something like that?

[noiretextatique]

4. they are really difficult to deal with, from my experience

and not very willing to negotiate.

[TwilightGardener]

7. Not in my or my husband's experiences. We've had them deferred

a couple times in the past for hardship reasons. We also combined them and refinanced for lower payments. I thought they were the most reasonable creditors I ever dealt with, in fact.

[lib2DaBone]

41. Well La Ti Fuckin Da.. I guess you are special...

[quiller4]

66. Your tone is uncalled for. n/t

[quiller4]

68. I've taken clients to the Education Opportunity Council , a local

nonprofit, for help bringing loans from a default status so they could secure funding to return to school. The process was quite simple and painless. What they were able to do in terms of waiving late charges and defering payments really surprised me. It was a whole different wold that dealing with collectors from credit card companies who had no difficulty threatening arrest to force clients to make payments they could no afford.

[Myrina]

22. Nice tone, thanks ....

In Feb, I lost the job that allowed me to afford the house in the first place (an FHA loan a few years ago for a house that was already repo'd & priced lower than market - not a new McMansion) and the car (a 5 speed Toyota compact in 2006 - we're talking $9999 NEW, not a Mazerati, ok?).

Recalc'd my mortgage with CITI and got a job in June that pays $6k/yr less than I was making ... so, no I don't have $500 a month to spare and the collections agency for the Dept of Ed will not budge under $500/mo, nor will they even go so far as to assure me that if I send in $250/mo in godd faith, they won't send me to garnishment anyway.

[michreject]

44. garnishment is per pay period now.

Not monthly as it once was.

[TwilightGardener]

46. You've already cut out cell phone or landline service, cable, internet, entertainment

and hobbies, I presume? You're already working a second job on evenings and weekends, or picking up overtime or extra shifts, I presume? Because a $500 a month shortfall is not that hard to overcome. My husband and I had three jobs between us through the first 6 or 7 years of our marriage, working at places like Pizza Hut and overnight wiping butts in nursing homes, to make ends meet--didn't miss any payments that whole time.

[liberalhistorian]

50. Well, aren't you just too precious for words?

Just because it works for you doesn't mean it'll work for others. $500 a month may be a helluva lot harder for some than for others. And people shouldn't have to give up their lives just to increase the bottom line of greedy collectors.

[TwilightGardener]

51. LOL! YOU'RE the one who's precious! "Give up their lives" for

"greedy collectors"? In other words, those DAMN UNREASONABLE ASSHOLES who keep expecting you to pay back what you owe? You shouldn't have to pay back your debt obligations if it means slinging burgers at night, or giving up HBO, I guess. Too funny.

[Doremus]

54. Yes, ESPECIALLY considering that the $$$ they lend us is our OWN tax dollars anyway

Pretty fricking amazing.

[Doremus]

52. A positively gag-worthy post.

My, aren't you special?

[TwilightGardener]

55. Yeah, those are crazy suggestions, aren't they?

Clearly, I'm off the deep end.

[Doremus]

56. You're not off the deep end but your nose is definitely waaaaay up in the cumulo nimbus.

A little less arrogance goes a long way, friend.

[TwilightGardener]

57. Nothing arrogant about explaining how we managed to repay our loans.

You either make payment arrangements before it goes to collections, or you figure out a way to slash your budget, or earn more income--provided the OP is a healthy, able person with no extenuating child or family health or care issues, it's certainly workable. If not, then she has my sympathies and best wishes.

[Myrina]

58. Well isn't it lovely to be you?

:eyes:

[Name removed]

61. Deleted message

Message removed by moderator. Click here to review the message board rules.

[TwilightGardener]

62. Yep, you caught me--second jobs and cutting household budgets

and doggedly making payments certainly can't be the province of Democrats.

[SeattleGirl]

65. It's not the fact that you paid off your loans the way you did.,

It's great that you did that.

It's your holier-than-thou, I'm-better-than-you attitude that sucks.

Democrats are the people who realize that each situation is different, and one size does NOT fit all.

Try a little understanding; it goes a long way.

[proud2BlibKansan]

69. I take it you don't know that the money being loaned out is our tax $$$

I find it reprehensible that the Dept of Ed hires collectors who are this unreasonable.

[TwilightGardener]

70. What difference does it make where it comes from? You borrow, you pay back.

It's no different than any other debt obligation. And again, I've been in this person's shoes, we received two forbearances/deferments from the federal student loan program--once when I had my first baby and had to cut my work hours, and again when my husband was deployed for a year and we didn't have his extra moonlighting paycheck. We didn't stop making payments, but we called them and arranged it--they were very reasonable.

[proud2BlibKansan]

77. And they aren't being reasonable with this person

Which part of that do you not understand???

I too had student loans back in the 70s and I worked mine off. Our federal govt used to offer those kinds of loans. If you went into a helping profession, like teaching, you didn't have to make payments on your loans and 10% of the balance was forgiven every year you worked. Whatever happened to THOSE loan programs?

I am ashamed that my federal govt is spending my tax dollars to hire predators who refuse to make reasonable arrangements with borrowers.

[TwilightGardener]

79. I don't think we have all the facts. Did the OP just stop making payments

once she was unemployed, without trying to arrange something first? I would guess that's the sort of behavior that makes creditors uneasy and less willing to be flexible--usually you try to contact your creditors to make arrangements BEFORE you're in serious default and it gets turned over to collections--you'd have at least a couple months, I would think. If she tried that, then I'm surprised that they wouldn't give a temporary forbearance for the job loss. For that matter, do we know that the OP has a reliable on-time history of loan payment BEFORE the job loss? Have there been payment accomodations in the past that haven't been honored? Since she's working now, has she sent in any payments at all to at least make a good-faith show? How long has she been missing payments? Is that $500 payment more or less than what was being repaid before default? Are they looking at her FICO score/credit history and doubting that they'll ever see that $62,000 again? That's a really huge loan, and student loans are notorious for default, from what I've been told. There may be reasons why they're past the "accomodation stage" that we don't know about--just too many factors at play to judge from the post whether or not the treatment is fair. Either way, though, they're going to get their money--why not come up with any way possible to wrangle $500 out of the monthly budget, or try to get them to agree to $400, or even $300, or earn it on the side for a while, rather than have the government seize your money and ruin your credit? You lose a big chunk of control over your finances and choices then.

[TheKentuckian]

73. Have you missed that we are hemorrhaging jobs? Lots of us are trying to find ONE

Or that all of our effective wages have shrunk? Or even that the jobs available start lower and lower?

This "advise" rings hallow in this economy.

[grantcart]

67. I really don't know anything about it but if you can send in $ 250 a month

then I would continue to send that in. That will boost your side when you claim hardship. If you say that you can afford $ 250 but don't send it in they will use that against you.


Good luck.

[liberalhistorian]

49. NCO is a horrible collection agency,

and they've had many complaints against them. Some collectors are much more willing than others to work with debtors, and NCO isn't one of them. They are scum.

[sinkingfeeling]

2. They can take any tax refund you might receive and they can garnish your wages until your

debt is paid off. This happens with parents and child support collections.

[noiretextatique]

3. i am in the same boat

student loan assholes were not willing to negotiate a lower rate, so i let them garnish me. 15% of my take-home pay is a lot less than what they wanted me to pay. there shouldn't be any problems. as an accountant, it doesn't look good for me to garnished, but i explained the situation to my boss, and it's fine. your employer cannot do anything to you because of a garnishment.

[prolesunited]

8. Yeah, but I high negative on your credit report

certainly can prevent you from landing a job.

[Occulus]

42. that practice should be outright banned in the first place n/t

[rd_kent]

5. No, but I had someones pay garnished.

Deadbeat tenant that owed me unpaid rent and damages. Refused to pay, I took him to court (he never showed) and I got his pay garnished. Took some time, but I got my money back.

[uppityperson]

15. I had ex's pay garnished when quit paying child support

Ex was making nearly $100,000/yr and quit paying the $200/month child support. Was in arrears nearly $10,000 and I got wages garnished. Ex was very angry, how DARE I embarrass him like that?

Good grief, pay what you owe your kid.

[rd_kent]

37. Agreed! Student loans suck, but they are debt one icurrs willfully.

And willfully incurred debts need to be paid.

[izzybeans]

59. That's good to know. I am in the process of doing this right now

with our tenant.

Damages hearing coming up. They trashed the house after they were evicted. Dog shit and piss everywhere, three months unpaid rent. Broken tiles, large trash all over the yard and in the house.

[rubberducky]

6. Been there. Yes, they can take a percentage of your pay.

It seems like a hell of a lot more than 15%, but that is from the gross, which means it takes a BIG chunk of your take home pay.

[Beer Snob-50]

9. the fact that you are being garnished will be on your credit history

i work in the payroll department of a company and have to do many garnishemtn usually for child support. depending on the state, there is a limit to what can be collected. 15% of disposable income is the usual limit. the dept of ed could have the irs and state take your tax refund to pay off the debt but if you get some kind of plan setup, that can be avoided.

[jpljr77]

10. Be very careful with federally-backed student loans.

They enjoy a privileged place in the debt hierarchy: can't be expunged in bankruptcy, no statute of limitations, and the agency (or their collection vendors) CAN intercept certain gov't payments, like tax refunds. In other words, don't think it's like private credit card debt.

A Fed-backed garnishment is no joke. It is permanent (until you pay off the debt, of course). Right now, it sounds like the collector is trying to "rehab" you, or get you back into currently paying status. In the long run, it might be worth it to go back current. I think it takes nine consecutive payments to do that. That way, if something comes up down the road, you at least have the option to skip a few payments and go back into collections.

If you get garnished, that amount is coming out of your paycheck/tax returns, etc. until it's paid off. It might be a lesser amount every month, but you really can't shake it.

[bobburgster]

11. Know what you're going through.

I am in a very similar, though not as large of an amount as you. My situation is almost identical. Until recently I was paying a small amount each month, which in retrospect was dumb, because I wasn't touching the principle. They just started the garnishment threats with me also. I'm interested to hear any input on this topic also.

[TreasonousBastard]

12. Check with a lawyer, but I thought they had to go to court and..

get a judgment before they can garnish your pay.

Collection agencies use this threat a lot, but they're often the ones to lose out completely when the garnishment goes directly to the creditor.

[jpljr77]

21. Normally I would agree with the collection agencies part

But this one is legitimately working on a very large contract with the Dept of Ed: http://www.insidearm.com/go/arm-news/pioneer-and-conserve-leading-collectors-for-ed-in-second-quarter

It's not a threat...the collection agencies that work for the Dept of Ed garnish all the time, with ED's blessing.

[Myrina]

27. Interesting info ... looks like you know the subject well ...

... any suggestions?

[jpljr77]

28. I know this subject VERY well, yes.

Unfortunately, my only real suggestion is to try to pay the plan amount being offered, or attempt to negotiate it lower. Ask them explicitly if they are trying to rehab you, and how long it will take. Typically, once you get rehabbed, your payments will go back down to their original level. So it might be worth it to see how long you'll have to pay the $500 and what will happen once that has been satisfied.

But I know that's not going to help you much. Doing the quick math in my head on $62k, your payments were already probably pretty high. And that's the problem, unfortunately...that principal is so high (not much you can do about it now, I know).

Garnishment is not the end of the world for someone in your position, I must say. If you really, really, really can't make the higher payments, then maybe it makes sense. But only if you enter into it with the intention of paying much higher payments down the road (like, within three years). Otherwise, with that principal, you'll be garnished forever.

[Myrina]

31. The alternative I am looking into ...

... is to go thru a private lender (read: loan shark, with my credit rating) and combine my student loans and the remainder of my car loan into one payment. This would pay off the car note, allowing me to drop my insurance to the bare minimum, and get NCO/Dept of Ed off my back.

I'm just not sure what that new combined payment is going to look like.
I hope I have enough left over to buy groceries at least once a month. :(

Any suggestions on that?

[jpljr77]

35. Yeah, I have a suggestion...don't do it.

As far as creditors go, the Dept of Ed is one of the best you're going to find. Seriously. I know they seem aggressive, but their actions pale in comparison to what private lenders pull. The same is true for the collection agency (NCO is a great example, fwiw). They're working for ED right now, so they have their nice guy hats on. Boy does that change when they're working for a bank.

Plus, the interest rate on your student loan is protected and actually quite reasonable. A consolidation loan might not be that way.

I know it's really attractive to try to do anything you can, but take a step back and look at it logically: which do you trust more, a private lender that will say anything to take advantage of your situation just to get your business, or the Federal government? Which do you think will treat you more fairly in the long run?

I don't know how old you are or how long you've been out of school, and I know it's a tough economy, but the best advice my father ever gave was "Trust me, be patient...you'll earn your way out of it very soon." And he was right. "Soon" is often 2-3 or even more years, but it didn't take long for my wages to grow, while my debt service stayed the same, thus "earning" my way out of a very similar situation.

[michreject]

45. Not always

http://www.studentloanborrowerassistance.org/collections/government-collection-tools/admin-wage-garnishments/

The government can garnish your wages without first getting a judgment in court.

[DURHAM D]

13. One problem with being garnished from another perspective...

Employers don't like to deal with them. I had a friend who lost his job because the small business owner did not like the hassle with the payroll.

Also, I think the IRS can take your refunds regardless.

[Sen. Walter Sobchak]

30. The company I work for HATES them

The rules in California for employers who are ordered to garnish an employees wages are absurd, the two individuals we had to garnish had also been completely fucked over by their worthless ex-wives - both of whom were estranged from the child theoretically being supported, one was even incarcerated in another state. This was of no interest to the great state of California.

"It is illegal not to pay amounts withheld for the Earnings Withholding Order to the levying officer. Your duty is to pay the money to the levying officer who will pay the money in accordance with the laws that apply to this case. If you violate any of these laws, you may be held liable to pay civil damages and you may be subject to criminal prosecution."

Then there is this fucking valentine, http://www.courtinfo.ca.gov/forms/documents/wg005.pdf

Oh yeah, what company doesn't want to deal with that? Especially when various lazy/stupid/indifferent bureaucrats WILL find ways to fuck up you couldn't even imagine that can land YOU in trouble.

[undeterred]

32. I heard about someone who was fired for having

3 garnisments and getting a 4th. The thing is, if you don't have a job how can you pay back your debts? It seems like this should be an illegal reason for termination.

[Sen. Walter Sobchak]

34. It is an enormous amount of trouble and potential liability,

it is understandable why a company might wish to get rid of such a person - however people being garnished will often quit themselves just to restart the clock somewhere else.

[Xithras]

36. It costs the companies time and money.

I ran a business up until last February, and my accountant (not an employee, a company I hired to handle my finances) also handled payroll for me. Everything they did cost money, so calculating out withholdings and sending additional checks to third parties would have added an unwanted expense to the company. I never had a company with a garnished paycheck, but I can see how a small business owner wouldn't want to deal with it.

[Myrina]

39. It is (supposed to be) illegal ...

... although the penalties (something like a couple thousand dollar fine) - for some companies - may be worth it. :shrug:

[Sen. Walter Sobchak]

40. why would it be illegal?

[Myrina]

43. To fire someone just because they've got a garnishment?

Because that's - in some ways - discriminatory ... saying an employee is 'too much trouble' to handle the paperwork or whatever is involved from the payroll side to fulfill their garnishment order?

It in no way reflects on someone's job performance or their qualifications ... it merely represents an 'inconvenience' for the company.


http://www.dol.gov/esa/whd/regs/compliance/whdfs30.pdf

"The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that debt, because of the single garnishment."

[dugaresa]

63. however it may tell the company something about the person not dealing with issues

when you make your personal problems a problem for your company, then it says something.

Whether it is child support, taxes, student loans, etc, when someone makes that problem public to their employer, it may perhaps give the employer a diffrent perspective on the person. (right or wrong)

I agree with you that it seems unfair to let them go, because it makes their payment problems worse.

[undeterred]

74. From what I've heard child support

is always a garnishment. This person had two marriages with at least one child from each, so that's two garnishments right off the bat. If child support has to be garnished (without the person even getting the option to pay it himself) it just doesn't seem right that those count as strikes against him right off the bat.

Who gets hurt if this person loses a job? The children he is helping to support.

[dugaresa]

76. I agree with you, however anytime we make our personal lives more visible

to our employer it is a risk.

Doesn't matter if it is a garnishment or going to the boss for unpaid leave to deal with a personal matter, it puts your personal life out for review.

I don't think they should be able to fire someone for it, or let them go, however this is why I tend to be very private at work.

You never know how people you work for will use it against you and I have just seen too many circumstances where people were honest about things and or had issues come up related to the personal life and it hurt them at work.

[undeterred]

78. That's why I don't do social networking

I know some people don't think twice about it, but I like my privacy.

[JoDog]

14. Haven't been garnished, but

my sister is, and I declared bankruptcy earlier this year.

It is a big blow to your credit rating that lasts until years after the garnishment ends (basically, it can take 7 to 10 years for an action to fall off your credit report). While you are not "looking" to replace a car or move in the next 10 years, well, life has a way of demolishing the best laid plans.

Figure out what (if anything) you can pay a month, call up the Dept. of Ed., and make an offer to pay that amount for the time being. If you are unemployed or experiencing a health of family hardship that effects your ability to pay, you need to let them know that. Also, you have up to 36 months forbearance you can use if you haven't already. Forbearance means that you cannot pay or doing so would inflict hardship, and you get to take a break from making payments. Interest still accrues during the forbearance period.

The US Dept. of Ed tends to try to work with people more than private banks, so if you haven't talked to them, you need to immediately.

In garnishment, they will take the set percentage of your paycheck. Since you owe to the government, they will also seize tax refunds. If the percentage is less than what your payment would be, then you might consider taking the garnishment for now and making other arrangements when things improve.

You will only be garnished until the debt is paid off.

[sandnsea]

16. They will apply taxes to the fee, sell your loan and slap on a new fee

If you can figure out how to get some reasonable monthly payment, or just file deferrments forever, I'd try it. They really will be there forever.

[Warpy]

17. Well, it saves you the trouble of writing a check every month

but there is a certain stigma attached to it. In addition, it will be completely inflexible in that the money is taken off the top, whether or not you're having a financial crisis at the time. They won't care.

In other words, you can't stall them for a month when the transmission dies or you need a root canal.

However, if you can get a better rate due to pleading financial hardship over that $500/month, it might be worth it in terms of saving you the aggravation of having them on your backs. The money vanishes before you ever get to touch it and they have no reason to contact you again.

[Cleita]

18. F the collection agency and try to negotiate some payment schedule directly

from the Dept. of Ed. For one thing giving your money to a collection agency does nothing for your credit rating. Also, they usually take half so the Dept. of Ed only gets half. I'm sure they would be willing to work with you if they figured they would eventually get all the money you owe instead of half. Yes, they are trying to shake your cage. They are experts at it. Don't let them. I used to have to turn accounts receivable over to collection agencies but only when they were hard core about not paying.

[Myrina]

26. The Dept of Ed uses that collection agency for "distressed debtors" ..

... there's no way around them. :(

[conscious evolution]

19. A friend did

He quit the job and got another.Then they had to search him down again and start the process all over again.Then he quit that job when they started garnishing again and they had to do the whole thing over again.
He did this six times before they gave up.
The only drawback he told me about was having his state and federal tax refunds siezed every year.But after about ten years the siezed refunds paid off the loans.

[wroberts189]

20. Hope you got something for that 62k.

Finally paid off my wife's loans ..her at age at almost 40.

What a screwed up system we live in. You should not have to spend your life paying off college.

[SPedigrees]

23. Get a good attorney

to negotiate monthly payments lower than the $500 per month the collection agency is asking for.

[Buzz Clik]

24. Have I ever had my gay varnished? What's that supposed to mean?

Um... what? Wait....



Nevermind.

[8 track mind]

64. or an end to violins. Or Porto Rician steaks.

oh how i miss you gilda radner

[donco6]

25. Once it's turned over to collections, it's a real problem.

The Dept of Ed may have sold the debt to the Agency, and once they do that, there is no negotiating with them anymore. It's not their debt; it now belongs to the collections agency.

[quiller4]

71. You can sometimes get Dept of Ed to pull a debt back. It is worth trying.

[HopeHoops]

29. I opened my pay envelope one time and -D'OH! There was a fancy cut radish!

I looked deeper and found some slivered olives and fresh thyme.

I hate when they garnish my paycheck!

[Buzz Clik]

38. A touch of parsley on the side would have been plenty.

[ThomWV]

33. I had it happen once, they got part of my check, but that was all

Now the IRS, that's a different story. When they swoop down on you they lock up everything. Assholes too.

[Forkboy]

47. "I can't have my wages garnish-ied"

[Matariki]

48. I had a small student loan that I *thought* I'd paid off in 1991

Of course I didn't have any receipts or proof that I'd paid. In 2006 I suddenly started having all my tax refunds taken for the loan with was supposedly unpaid. The original loan from 1980 was $1250 - the amount they said I owed with interest and taxes in 2006 was over $5k. Last tax refund supposedly covered the last of the loan, but I have yet to receive anything from the Student Loan agency that the money went to stating that the loan is paid. For all I know, in another 15 years they'll claim I owe another $5k

Point being, laws were passes that removed any statute of limitations on student loans, so you will be stuck dealing with it.

[handmade34]

53. Myrina- my advice is

don't let them garnish your wages. work with the agency to get your loans out of default (payments for 9-12 months can be as low as $20/month in some cases) Once you are out of default, work out a reasonable payment plan. Never a good idea to get wages garnished and while you read that garnishment for Student loans maxes at 15%, so do payments... better to work cooperatively with them. There is lots of information out there. I can send links if you still need them. I have student loans that went into default when I had to take time to care for my dying husband. I "rehabilitated" them and am much better off. Pay no mind to those *I can do it so can and should you* pay back your student loans.... all situations are different and solutions to problems vary

[librechik]

60. Go back to Direct Loan

that's one way to get NCO off your back (I think)

and see if you can get into the new income-determined payback schemes. (the changes are live now, started in August.)

It might be lower on a month to month basis, to get garnished, though. I wouldn't worry about the stigma--everybody's in the same boat.

[Blue_In_AK]

72. I had a little run-in with the IRS several years ago.

I couldn't pay the entire amount that I owed, so I was working with the local office on setting up a payment plan. They apparently forgot to tell the central computer because they took all of my next paycheck except for about $500 which they thought I could live on for a month (never mind that my rent alone was $800 a month). I was livid, especially since I had been trying to do the right thing. It eventually got straightened out and I got some of my money back. What I remember most about that, though, is that the IRS asked me to tell them the absolute maximum that I could pay a month, given my other obligations (I also had an infant child at the time). I said $100, and they said, "Okay, we'll expect $200 a month from you." Nice.

Consequently, my credit card payments suffered and it took me several years to get back in everyone's good graces. :(

[styersc]

75. I have had periods where I have had to defer payments, even

for many months at a time. I've always found the Student Loan folks very easy to work with.

Your attitude and comments towards several responders, however, indicate that our approaches are different. If you were as nasty with those charged with handling your account as you've been on this thread, I can see why garnishment made sense to the lender.