Can a collection agency garnish my wages for a student loan with out a court order?

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Can a collection agency garnish my wages for a student loan with out a court order?

Sent a letter to my employer.

Asked on February 26, 2011 under Bankruptcy Law, Missouri

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, they can.  They are not a collection agency per se it is the holder of the loan.  And what they can do is known as Administrative Law Garnishment.  Here is an explanation:

Under the Higher Education Act, the Department and guaranty agencies may require employers who employ individuals who have defaulted on the repayment of a student loan to deduct 15% of the borrower's disposable pay per pay period toward repayment of the debt. Also, the Debt Collection Improvement Act of 1996 permits the Department to garnish up to 15% of disposable pay. Garnishment may continue until the entire balance of the outstanding loan is paid. You should note that wage garnishment is used only for borrowers who refuse to voluntarily repay their defaulted loan and is not used with those borrowers who continue to make regular and timely monthly payments.

So your option is to make a deal.  Good luck.


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