Garnishing as a Cheaper Option?
Posted by deap_p@reddit | studentloandefaulters | View on Reddit | 11 comments
Has anyone in this sub that’s had their wages garnished found that it’s cheaper than the monthly payments originally from the private loan? I’m looking into strategic default on my Earnest loan and am terrified of my wages being garnished and severely impacting my family. For context, I’m HOH in the state of Missouri with a 10 year SOL.
jonsonmac@reddit
I paid mine before it got to garnishment, but one benefit of defaulting is interest and late fees stop. However, if it gets to the point of garnishment, they’ll likely tack on fees and court costs. Are you in a position to settle with them if you default?
deap_p@reddit (OP)
I have about 182K in private loans so I am likely not in a position to settle. I know they will settle for less than what you owe in a lump sum if I’m correct, but it is probably not what I can afford.
Generation__Why@reddit
Depending on the age of the loan and your circumstances you have a chance in bankruptcy. You'll need to show why your income prevented you from paying. If you made a good salary, but spent it on other things you'll lose. If you have kids, have worked hard and struggled there is help.
An attorney for the adversary proceeding, $10-15,000, will be expensive and I have no idea what Missouri law is like. You can look into other student loan bankruptcy cases brought before the court since COVID in your region to give you an idea. Link below to you district below. There will be another page if that doesn't fit your geographic area. Good luck.
https://www.moeb.uscourts.gov/
jonsonmac@reddit
Oh wow, that’s a substantial amount.
You should see if you can find a bankruptcy attorney who would be willing to fight for a discharge for you. The chances are slim, as very few people are successful, and very few lawyers will even take the case. But it might be worth the fight with that much debt.
RecordingMountain585@reddit
Don't collection agencies also charge interest on the debt they buy?
Generation__Why@reddit
They try to scare you into this. If you don't pay they will eventually lower their offer.
jonsonmac@reddit
Not in my experience.
TheresaSweet@reddit
Have you tried to ask for better payment terms? Any programs they have to lower your payment, even temporarily? You might want to try to get attempts at such on the record before you default. (In writing is always best)
As someone who strategically defaulted many years ago, they can’t garnish unless they take you to court and win.
LoneShark81@reddit
i had garnishment briefly and it was miserable...it wasnt a set amount... i would try to work overtime to offset it and they would just take more...worst few years of my life
Surround-Author@reddit
From what I saw, garnishment on private loans isn’t automatic—they’ve gotta sue you first, win, and then go through the process of garnishing, which takes time and money on their end. Once they do garnish, though, it’s usually a fixed % of your paycheck (like 10–15%), and weirdly, yeah, that can end up being less than what your original monthly payment was. But the kicker is the interest keeps racking up, and it tanks your credit hard.
LisaInSF@reddit
Creditors can’t garnish wages unless they have sued the borrower and obtained a court judgment. From there the % and exemptions depend on state law. Most states allow you to avoid the maximum amount of garnishment if you need all your income for living expenses. If you are sued, find a lawyer who can help, or a legal aid office.