The best way to prevent both wage garnishment and bankruptcy from student loans is to never allow the loan to default in the first place. Typically, a federal student loan will go into default after the failure to make payments for 270 days. This adds up to nine months of not paying. Even if small payments are paid as part of a repayment plan, the options are much better.
If a student loan does become defaulted, and garnishment is pending, it is important to know all of the information. The federal government is only legally allowed to garnish 15% of a person’s net income. This amount can be seized as long as the resulting amount does not fall below minimum wage. In other words, the minimum paycheck taken home each week for a full-time worker is $217.50. Nothing below that amount can be taken. It is important for a person to know his or her own limits, and fight the garnishment if need be. If wage garnishment causes undue financial hardship, a person can either delay the garnishment, or possibly stop it from happening altogether. Despite this, there are some options to stop wage garnishment without having to file for bankruptcy.
The easiest way to get rid of that loan is to pay it off in full. Of course, this is nigh impossible for most people. However, even small payments set up through a repayment plan with the loan servicer will help. If a person is making voluntary payments, wages cannot be garnished. Another option could be to seek legal advice. After getting a write-up of exactly what is owed and what payments have already been made, a person could seek an attorney to make sure everything is in order. If not, a hearing can be filed, and the person could be exempt from the garnishment. If everything is in order, the attorney could still provide good advice towards the future of the loans.
Bankruptcy should never be an option to erase student loans. This is because there is absolutely no guarantee those loans will be forgiven or discharged. A bankrupt person may still be responsible for his or her student loans under federal guidelines. For this reason, it is important to know all of the options available after defaulting on a student loan. Facing wage garnishment is not the worst thing that could happen, but it may seem like it for some people. If financial hardship can be proved, the garnishment could stop completely. Otherwise, a repayment plan should be set up and voluntary payments made to stop the garnishment from continuing any further. There are always options.