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What to Do If You Receive a Wage Garnishment Notice, Part 1
If you do get a dreaded notice of a wage garnishment in the mail, don't panic and run off to Guatemala. Instead, face the issue head on and decide how you want to proceed. You basically have three options: (1) Pay the amount they ask; (2) pay a reduced amount; or (3) don't pay at all.

If you want to repay what you owe—and not claim a financial hardship—the Department of Education will set up an installment plan with you whereby you pay 15 percent of your disposable pay. You won't have to go through some big production proving your expenses. Just giving two recent paycheck stubs will be sufficient to establish your income. The wage garnishment won't begin, and the monthly payments—at exactly the same rate that would be allowed under the law with a garnishment—will begin. The difference is that this matter will be handled quietly, more or less, between you, your lender or guarantor, and the Department of Education. You'll save yourself the personal embarrassment and credit woes that come along with having a wage garnishment. You'll also preserve your professional reputation at work by heading this matter off before your employer is forced to get involved. Call the customer service department at the Department of Education at 1-800-621-3115 to start the process of arranging a voluntary repayment.

If you do want to claim a financial hardship status, and because of your current financial predicament you want to pay less than the garnishment amount shown on your notice, here's how to approach things. After you get a letter in which the Department of Education says it intends to garnish your wages, you should immediately obtain, fill out completely, and submit the Statement of Financial Status. Provide rock-solid proof of all your income and expenses. Give them two pay stubs, along with the last two years' W-2 statements and income tax filings. The department will then review your situation, analyze your income and expenses, and using the standards approach I previously explained, the agency will accept an installment amount based on your available income after necessary household expenses.

And guess what happens if it's determined that you're flat broke and you have no money left over after you pay all your monthly necessities? Believe it or not, you don't have to pay anything! Don't just take my word for it. Again, this is what their own rule book says,: "If no amount appears available after expenses are met, the department suspends attempts to garnish." Does this mean you're off the hook forever and that you no longer owe your past-due student loans? Of course not; that would be too good to be true. The Department of Education has the right to—and will—check back in with you later to see if your financial situation has changed. "Any repayment agreement or suspension of enforcement action is subject to re-evaluation periodically, typically at six-month intervals," the rule book says.

If you object to a garnishment on hardship grounds or on another basis, you have to fill out and send in to the Department of Education a four-page form called an Administrative Wage Garnishment Request for Hearing in order to have your objection heard. You can find the form online at After you complete it in its entirety, send the form to:

U.S. Department of Education PO Box 617763 Chicago, IL 60661-7763

You must choose to make your case to a hearing official via one of three methods. You can:
  1. Submit written documents in support of your hardship claim;
  2. Go to one of three Department of Education offices and present your case in person; or
  3. Request a hearing over the telephone.


Article Title : What to Do If You Receive a Wage Garnishment Notice, Part 1
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Related articles
• What to Do If You Receive a Wage Garnishment Notice, Part 2
• Wage Garnishments, Part 1
• Repayment Assistance Programs, Part 1
• Credit Card Tricks, Part 1
• Money Management Basics, Part 1

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