Pre-garnishment. Can I rehab the loans?

Guys new to the board and wish I had found them LONG ago.

I just received my Garnishment Hearing Decision and despite my appeal that I couldn’t afford to pay 15% of my income, they said yes I could and they are going to begin garnishment of my paychecks. I have 15 calendar days from the date they wrote the letter to contact the collection agency and work out a payment plan that is the same amount they would be garnishing. ($312.67/mo). (my 15 days is up on Friday 22)

I have no choice but to begin payments or they will take it by garnishment. Can I also rehab the loans at the same time we are working out the voluntary payment arrangements so that in 9 or so months I MAY be able to consolidate? Can’t my employer charge me a fee for having to deal with the garnishment?

In addition to the student loans that are in default I have 2 other student loans that are being paid on time at $140 and $50 monthly.


HAPPY FATHERS DAY

Whether or not you can rehab is going to depend on how big the loans are and thus, how much will be left once you finish the nine month program. You should at least try, because forced garnishment is NO fun.

Have you tried the ombudsman? They may be able to help you get the payments lower ... are these defaulted loans on your credit report? IF not, you should consider consolidating them to bring down the overall amount you'd be paying every month.

HTH.

Hi Paramednic,

My fiance's employer notified him Monday re: the garnishment order and the first pymnt of $126.00 was deducted from his checkon Friday. He has a defaulted Direct Loan in the amount of approx. $3500.00. I spoke with the collection dept. and was informed about the 9 month rehab program and from my understanding we have to pay an add'l $44.00/mo (after an arbitrary financial assesment over the phone) ON TOP of the garnishment amount for 9 consecutive months after which the account will roll out of default automatically and he will be eligible for more aid.

Like TX said you should consolidate ASAP if you are able!!!!

We have a 3 month old so you can imagine our dismay with this garnishment
Hang in there it seems the dept. of ed is somewhat client friendly

HTH

I don't think that is right ... the absolute minimum payment on a SL is $50/month. I would question that before starting it.

I totally agree with Quilty....$50 is the minimum payment for rehab.

Regarding your situation. Please contact the Agency before the 15 days elapses. You must enter into that Rehabilitation now as the $312.67/mo will be taken from you involuntarily in the form of garnishment and then you will need to pay an additional payment on top of that in order to get through rehab. You're by no means in the minority by having your Hearing denied. Most borrowers do not qualify for even the reduced amount. At least you have the opportunity to get into voluntary repayment. My guess is that when you finish your rehabilitation you will see your payments drop. The $312.67 sounds like the calculation of 15% of your disposable income (if this is the case, that would put your monthly take home $2084.47).

To clarify, if you begin the voluntary payments at $312.67/mo., that IS your rehabilitation payments and you won't have to pay additional monies to rehabilitate the account provided that payment meets or exceeds the minimum for Rehabilitation (which I'm quite sure it does).

Regarding the fee your employer may charge, that depends on the state; some states permit the imposition of a fee or charge on the employee. Federal law does not address the issue. You should check your state's law.

Also Quilty, I do not believe contacting the Ombudsman would do much good as even Ed's Ombudsman's site directs the Borrowers to file a hearing (Timely or Untimely) which results in the same end. With the kind of income he has I highly doubt he'd qualify for any sort of reduced amount.

I don't know how often the OP gets paid, so if he gets paid on a monthly basis - which is possible - then his income may not be nearly so high as you think.

ETA: I see that's $312 a MONTH. My garnishment was nearly $400 and I managed to successfully get it stopped. It never hurts to try. And if the CA isn't willing to work with him, the ombudsman may be able to help.

an update,

NCO (SATAN) has agreed to stop the garnishment process, so long as I make voluntarily monthly payments, and said the payments would satisfy a rehab at the same time. We are still faxing this and that back and forth, but in the mean time I am signing up for all the overtime i can.

Thanks for the advice.