You're doing your best with your financial situation, but you're barely staying afloat. In addition to staying above your bills, you could have a mountain of debts to repay – payday loans, credit cards and car payments. And maybe, because you've been having difficulties for some time, you've been defaulting on your money loans.
What is frightening is that with respect to your federal payday loans, the government has a lot of influence and special ways to get the money they owe – for example, seizing part of your salary without a court order, collecting part of your taxes repayment, and even claiming a percentage of your Social Security benefits.
Yeah, it's scary. If you are in default of repayment of your cash loan and run the risk of seizing your salary, know that your back is not against a wall. There are options to stop it from happening. But first, a brief overview:
What is a wage seizure?
Generally, the garnishment of your cash advance salaries occurs when your payday loans are defaulted for nine months. When this happens, the government has the right to take a percentage of your salary to repay the loan.
"Some people think that a garnishment of wages means that a lender can accept the entire salary of the borrower," says a payday loans lawyer based in Boston and New York. "In most cases, the paydayavailable lender can collect only a portion of the borrower's salary. The details vary depending on whether the payday loan is federal or private and may also depend on the law in force in the state. »
For example, the government may receive up to 25% of your salary, half the difference between your net salary and the federal minimum wage, whichever is less. In the state of, the salary input is the lesser of up to 10% of your gross salary, or 25% of your net salary.
Here's what you can do to challenge the garnishment.
Request a hearing
You can ask for a hearing to explain why you don't think you have to repay the loan. As Minsky explains, federal payday loan borrowers have the right to request a garnishment hearing and they can also try to solve the problem through a rehabilitation plan-which we will get into later on.
"For private payday lenders, there may be defences following the garnishment," Minsky explains. "But it depends on the facts: most private loan foreclosure actions will take place through state courts."To find out if it's wise to ask for a hearing, you might want to talk to a legal professional, such as a lawyer, who specializes in cash loan.
Look into loan rehabilitation
With the rehabilitation of a loan, you will have to make nine consecutive one-time payments within 10 months. After making five consecutive payments, the government will stop entering your payments. The good news is that the amount of the payment does not have to match the amount of your monthly payment before the default. You can ask for lower payments to make them more affordable.
See if you are authorized to cancel your federal money loans
Under special circumstances, you may be able to cancel your federal student loans. For example, if your school closes within 120 days of leaving, your federal loans may be cancelled. Or maybe you stopped attending and you have to pay it back. You may also be able to cancel your payday loans if you did not have a post-secondary degree or diploma when you attended school, and the school did not exercise due diligence in verifying that you had obtained your high school diploma.
In addition, some or all of your federal loans may be cancelled if your school violated a law or misled you. Your loan may also be cancelled if you become totally and permanently disabled.
To find out if you are eligible for the discharge of your federal loans, you will need to send the necessary documents directly to the Department of Education, the debt collection agency or the loan management officer. You can also try to fend for yourself and file a dispute. The has some useful information and tools to help you file a dispute.
Exit the default value
To ensure that your loans are in default, you can contact the Ministry of Education or the party that oversees the collection of your debts. You can check the (NSLDS) to gather information about your loans. You may want to consider consolidating your loans, which means consolidating all your federal loans into one. You, in turn, make only one payment. However, if your wages are currently seized, you will not be able to consolidate your debt.
You may also want to consider settling your debt. It may be difficult to achieve a win-win amount for both parties. In addition, you will probably need a large sum of money to offer as down payment.
Avoid passing by default in the first place
Of course, it would be best to avoid defaulting on your payday loans. Examine them to see which ones you are eligible for and which ones are best suited to your situation. You may also want to consider refinancing and see if you are eligible. By fully exploring your options, you will find it easier to make your payments and you will avoid all defaults.
If you have not repaid your payday loans, be aware that you can take steps to prevent the government from claiming a portion of your net salary. By knowing your options and doing some work, you can prevent garnishment of earnings. If you have specific questions, ask a debt specialist or a legal professional for advice.