Can Your Wages Be Garnished for Student Loans in Texas?

 Posted on January 30, 2024 in Student Loans

If you default on your federal or private student loans, you may wonder if your wages can be garnished to pay back the debt. Unfortunately, the answer is yes—your wages can be taken involuntarily under certain circumstances to satisfy unpaid student loans. A Texas bankruptcy lawyer can help you understand what can legally happen in your situation.

When Wage Garnishment Is Allowed for Federal Student Loans

The federal government can seize your assets, including up to 15% of your disposable pay, to repay the loan if you default on your student loans. This applies to federal Direct Loans and FFEL Program loans held by the Department of Education. The wage garnishment process usually begins only after you have become seriously delinquent on your loan and have ignored requests for voluntary repayment. Before garnishing wages, the Department of Education will notify you of its intent to initiate proceedings.

Garnishment Rules for Private Student Loans

While federal student loan wage garnishment follows standardized procedures, garnishment for private student loans depends on Texas state law and court rulings. Generally, a private student loan lender must first sue you and win a judgment before moving to garnish your wages. If it wins a decision, the lender can request a court order requiring your employer to divert a portion of your pay to the lender. In 2023, the maximum amount that can be garnished was the lesser of 25% of your disposable pay, or the amount your disposable pay exceeds 60 times the minimum hourly wage.

Steps to Potentially Stop Wage Garnishment

There may be actions you can take to halt the proceedings. You can apply for an income-driven repayment plan or loan rehabilitation program for federal student loans. If approved, this usually pauses collection activities, including wage garnishment

For private loans, contacting the lender directly to negotiate alternative repayment plans may stop garnishment. In extreme hardship cases, you can seek to have the garnishment order reduced or dismissed by the court

Avoid Wage Garnishment by Staying Out of Default

The best way to avoid having your wages seized is by staying current on your federal and private student loan payments and avoiding default altogether. If you are having trouble making payments, immediately contact your loan servicer or lender to discuss options like deferments, forbearance, or alternate repayment plans

Under federal law, you have the right to choose an affordable income-driven repayment plan for federal student loans. Making it a priority to address payment issues early on can help prevent you from becoming another wage garnishment statistic.

Contact a San Antonio, TX Bankruptcy Lawyer

Do not lose hope if you face wage garnishment for unpaid student loans in Texas. While some of your earnings may be captured, federal and Texas laws set limits to protect your financial stability. A Boerne, TX bankruptcy attorney can help ensure you are on the right path with your student loan situation. Call Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.