Is it legal for a private lending institution to garnish my wages when I have been paying them?

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Is it legal for a private lending institution to garnish my wages when I have been paying them?

I was contacted about enrolling in a debt consolidation plan for student loans (as I have 2 lenders- Sallie Mae and a private institution), and was told that when I completed the plan my loans would be consolidated under Sallie Mae with no history of default. I enrolled and payed them $80 a month for 12 months; they stopped debiting my account for the payment after the July payment, and I haven’t heard from them since (but I moved) Now, I get told by my boss that the company is garnishing my wages at 15% for every paycheck (which I can’t afford). Is this a scam? Is it legal?

Asked on October 12, 2010 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) If you've been making the payments as agreed, there would be no reason for garnishment or other collections actions--though if there was some clerical error which stopped payment or you moved or they lost contact with you (etc.), that might have been taken as default on your part.

2) Creditors cannot garnish wages without either (a) a court order or (b) agreement by the debtor giving them this right...did you perhaps sign something specifying that they could or had the power to do this?

You should speak with attorney. Bring with you copies of all paperwork, all correspondence, and proof of all payment you've made. You need someone to review the documention and factual records to help understand what is going on and what your recourse is. Good luck.


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