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Student Loan Default Garnishment papers sent to employer

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My employer gave me a copy of some garnishment papers they got today for my student loan default. I currently owe $5600. I can't pay in full to avoid garnishment. I also can't afford 15% garnishment of my disposable pay. I called the collection agency and they wanted to set up a rehab plan but said that's on top of the garnished wages. They said there is nothing I can do to make payment arrangements without having the garnishment in place also. Is that true? Is it possible to stop the garnishment order and set up payments on my own for a lesser amount than they would garnish? 

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How many student loans do you have? Rehabbing the loans would be best for your credit, but you'd still be paying the garnishment at the same time. Also, since your loan(s) defaulted, any tax return you receive, will be taken in an offset.

If you have 2 or more federal loans, you can consolidate them. The defaulted loans will still show on your credit report, but consolidating will put them into a new loan. They will also consolidate them into an income based repayment (IBR) plan, were your payments may even be $0 a month.

Some things may have changed the last few years since I did mine, and we don't know the specifics of your situation. These are the two options I had when I went through it 3 years ago. Rehab is better for your credit in the long run, but finances might be tight for awhile. Consolidation is quicker, but your credit will take years to recover.

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I do have 2 loans. It looks like at this point my best option (financially wise as to being able to make the payments without garnishment) is consolidation. I know my credit will take a long time to recover but I have some other negatives that I'm working on clearing that are going to take awhile as well so I'm just going to have to ride it out and do my best to clear it as quickly as I can I think. Thanks for the input. 


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During Rehabilitation you still face garnishment, until you complete 5 monthly qualifying payments. So you will have to make 5 rehabilitation payments during the time you are faced with the garnishment. After the 5th payment garnishment stops. Rehabilitation takes a 10 months and then your loans are resold to a loan servicer, which gives you options again forbearance, income driven repayment, etc. however you can only rehab once, 


When Rehab is setup your minimum qualifying payment is 5 dollars. 


As far as consolidation, I cannot answer that I was under the understanding you cannot do consolidation when you are already facing garnishment. Someone who knows more may be able to chime in. 

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Your other option to avoid garnishment is to make a request for a hearing. You should


make a hearing request in writing, postmarked no later than 30 days from the date the garnishment notice was sent;

make a request for a hearing, even if you are requesting copies of documents, because requesting documents doesn’t delay a garnishment order;

provide proof to support any objection made to the existence, amount, or enforceability of the debt, or financial hardship; and

pay any expenses you incur to obtain legal representation and to attend an in-person hearing. (All in-person hearings are held at one of the three regional offices: Atlanta, Chicago, or San Francisco. You are responsible for the cost of attending and the cost of any witnesses that attend on your behalf.)



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