Question: I just received a letter stating my student loan that has been in default is to be offset. I am working. I’m also already facing wage garnishment for child support arrears. I barely make $11,000 a year and they garnish $300 each month for my arrears.
My question is: Can the government garnish my wages at the same time garnishment for my arrears ? Or will they wait until I pay my arrears off? If they don’t do that, I won’t have anything left to live on!
— Angie in Texas
Steve Rhode answers…
You are living through a tremendously stressful situation, Angie. I wish I could wave a wand and make that pressure vanish. What I can offer you is good information and a plan forward.
1. Look into an offset
An offset is typically a tax refund intercept, unless you’re also getting federal benefits like Social Security. The tax refund intercept is easy to deal with — just don’t get a tax refund. You should adjust your withholding, if any, to get more money in your pocket each month and not in a refund check. Thus, you can avoid the IRS intercept and you’ll have more money to cover your expenses each month.
2. Payment plan
Now that’s a short-term solution. For more of a long-term solution on the federal loans, you can get into a $0 per month payment plan that will keep you out of default. In fact, I just recently answered a reader question that dealt with this.
I’m not an attorney. You’d need to speak to an attorney licensed in Texas for specific legal advice, but it appears in Texas you can have up to a wage garnishment that’s up to 25 percent of your disposable income — but not more than 30 times the minimum wage.
If you did get a federal student loan wage garnishment, it would come in the form of a letter and be called an “Administrative Wage Garnishment.” Open it. The letter will instruct you how to appeal the garnishment to hopefully get it suspended.
Texas will allow you to modify your mandatory child support garnishment if you can demonstrate the garnishment doesn’t allow you sufficient income to live on. To modify the garnishment, talk to the court or a licensed attorney in Texas. Another solution may be to look into debt consolidation, which can include child support arrears.
Thank you for letting me help you find a way forward, Angie.
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