Default on the Loan:
Wage garnishment can occur when a borrower defaults on their private educational loans. Default typically happens when a borrower fails to make the required payments on the loan for a specified period, usually 90 to 120 days.
Legal Process:
If a borrower defaults on their loan, the lender or loan servicer can obtain a court order to garnish the borrower's wages. This process involves filing a lawsuit against the borrower and obtaining a judgment from the court.
Garnishment Limits:
In New York, the amount that can be garnished from a borrower's wages is subject to certain limits. Federal law (the Consumer Credit Protection Act) sets limits on the percentage of disposable income that can be garnished. Disposable income is the amount left over after deducting certain expenses, such as federal and state taxes, Social Security taxes, child support, and alimony.
Exceptions and Protections:
Certain individuals may have exemptions or protections from wage garnishment. For instance, individuals receiving public assistance or veterans may have specific protections in place. It is essential for borrowers to understand their rights and explore available protections if they are facing wage garnishment.
Seeking Legal Advice:
If a borrower is facing wage garnishment for a private educational loan, it is advisable to consult with an attorney who specializes in consumer protection or bankruptcy law. An attorney can provide guidance on options for resolving the debt and potentially preventing or stopping wage garnishment.
It's important to note that wage garnishment is a serious consequence of defaulting on a loan and should be taken seriously. Borrowers should make every effort to stay current on their loan payments to avoid such actions and protect their financial stability.