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Discharged BK, does a wage garnsihment for student loan report to credit report?

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New Contributor

Discharged BK, does a wage garnsihment for student loan report to credit report?

My BK was discharged in Feb 19, I just got a letter from work saying my student loan is garnishing my wages. Will this show up on my credit report? How do I get this out of garnishment?

Message 1 of 12
11 REPLIES 11
Senior Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?


@brad0502 wrote:

My BK was discharged in Feb 19, I just got a letter from work saying my student loan is garnishing my wages. Will this show up on my credit report? How do I get this out of garnishment?


As you know student loans are not dischargeable. Did you miss a court date or a summons to show up in court? There had to be some kind of communication before the garnishment of some sort. Even the IRS will warn you when they will start garnishing your assests, bank accounts, and payroll.





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 2 of 12
New Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

There may have been a letter, if this shows on my credit report I’m totally screwed 

Message 3 of 12
Valued Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

Why would you be screwed any more than you BK and all you lates screwed you?

 

Was there a court hearing and court order?

 

If so, was it before or after you BK file and discharge dates?

 

 

 

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Message 4 of 12
Frequent Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

In response to. . .

 

“Did you miss a court date or a summons to show up in court? There had to be some kind of communication before the garnishment of some sort.”

 

and

 

“Was there a court hearing and court order?”

 

For Federal Student Loans, a typical Court Order is not required but notice is required for an administrative garnishment.

 

See:


20 U.S.C. §1095(a)

 

“Notwithstanding any provision of State law, a guaranty agency, or the Secretary in the case of loans made, insured or guaranteed under this subchapter that are held by the Secretary, may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment. . .

(1) the amount deducted for any pay period may not exceed 15 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the individual involved;

(2) the individual shall be provided written notice, sent by mail to the individual’s last known address, a minimum of 30 days prior to the initiation of proceedings. . .”

 

Des.

Message 5 of 12
Senior Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?


@despritfreya wrote:

In response to. . .

 

“Did you miss a court date or a summons to show up in court? There had to be some kind of communication before the garnishment of some sort.”

 

and

 

“Was there a court hearing and court order?”

 

For Federal Student Loans, a typical Court Order is not required but notice is required for an administrative garnishment.

 

See:


20 U.S.C. §1095(a)

 

“Notwithstanding any provision of State law, a guaranty agency, or the Secretary in the case of loans made, insured or guaranteed under this subchapter that are held by the Secretary, may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment. . .

(1) the amount deducted for any pay period may not exceed 15 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the individual involved;

(2) the individual shall be provided written notice, sent by mail to the individual’s last known address, a minimum of 30 days prior to the initiation of proceedings. . .”

 

Des.


Isnt this the same thing as I asked? Not much difference I'd say. I asked if they got a notice. You say its required. But once again you have to use my posts to point irregularities when there really isnt much differences at all.. Please stop. Lets help the poster in a team effort. Thats what were here for.

 

Me: “Did you miss a court date or a summons to show up in court? There had to be some kind of communication before the garnishment of some sort.”

You: "For Federal Student Loans, a typical Court Order is not required but notice is required for an administrative garnishment."





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 6 of 12
Frequent Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

@FireMedic1
Sorry you seem to think I am patronizing you.  Not my intent.  Just pointing out that there is actually a Statute that supports your comment.  Too bad you did not take it as the complement it was meant to be. 

Des.
Message 7 of 12
Valued Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

Hello,
I don't know about bankruptcy but I do know federal student loans. If this is a federal student loan, my guess it that it went into default.

*** Is this a federal loan? How old is it? When did it go into default?

Now that it has defaulted eventually gets assigned to a collection agency. This collection agency may or may not report that the account is still late. Collection fees will be added onto the loan and in addition to garnishment they will eventually take your tax refund and you social security. Federal student loans never just go away. They may switch collection agencies and the new agency may choose to report.
In short, you will do much better if you get the loan out of default as soon as possible.
You've got two ways to approach this, depending on what you have a need for most: stopping or reducing the garnishment, or getting the loan out of default.
You stated that you may have received the notice from your employer that they were going to garnish you? If that's the case, it's not worth trying to use as a defense. Not to mention they could just start a fresh attempt right after that. Your second option is to challenge the garnishment. Right now they are taking the maximum allowed. Even after the garnishment starts you can request a hearing based on several different defenses, one being that you truly can't afford it. You'll have to prove it. I believe this is resolved in about a month.
If there is no actual issue with the garnishment, you'll need to redirect your efforts to getting out of default. Your two options are consolidation and rehabilitation. I highly recommend rehabbing unless you're getting a mortgage very soon or you already used your one rehab in the life of the loan. Consolidation is quicker but it does not remove the record of your default from your credit report and doesn't remove lates. You'll get a brand new loan at 100% utilization, which will affect your credit profile. Rehabbing on the other hand is done in 9 monthly reduced payments. It removes the default, possibly removes the lates and it preserves your old tradelines. Once you finish you'll get assigned to to a new servicer. You can pick your new payment plan although I recommend an Income-driven repayment (IDR) plan. Most people get an immediate score bump and continue to get significant score improvements.
Once you make a certain amount of payments when you rehab (6?), the garnishment will stop. If you cannot afford both the reduced rehab payments and the garnishment you could probably ask for a garnishment reduction which I explained above.

Basically there's no reason to be worried. Whatever short-term affect it may (or may not) have on your credit report and score can be easily undone by getting the loan out of default.

One last tip: check the National Student Loan Database, NSLDS, government website. This will list all your loans balances and the status of each. When you do the rehab you should make sure that you are doing so for all loans you may have or you'll just find yourself in the same situation again with any remaining loans.
Good luck.



Message 8 of 12
Moderator Emeritus

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

@despritfreyaand @FireMedic1 you both have brought out information of significance. Your posts are most appreciated! In reading it may appear that we have differences in the information when in fact one was an extension on the other. After further research, we want to alert the readers that it is all right to have different views and opinions. When this happens, please feel free to ask questions of the posters so that there is clarity in the understanding. Some of the subjects in this particular area are a direct affect on our lives and we need good advice going forward so we can better live with the outcome.

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Message 9 of 12
Community Leader
Super Contributor

Re: Discharged BK, does a wage garnsihment for student loan report to credit report?

@Sabii , always appreciate your inputs regarding anything SL's, thank you!


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