The nationally recognized experts at the Suber Financial Group help those who are struggling under the burden of student loan debt achieve peace of mind, a better credit rating, and increased financial freedom.
The government can absolutely garnish your wages or taxes if you have defaulted student loans and you don’t have deferment.
This is why it’s so critical to find solutions if you’re struggling with your federal student debt payments. If you don’t, then the government is 100% within their right to garnish money from your wages or taxes. There can also be a salary offset for federal employees.
How quickly can they garnish my wages or taxes?
By law, there is not much wiggle room between being current with your payments and being in default. As soon as you miss a payment by 30 days, a loan becomes delinquent. Then, if your loan payments are monthly, the loan goes into default after 270 days (9 months).
Fact: If your payments are on less than a monthly schedule (e.g. bi-monthly), default occurs after 330 days (11 months).
Once the loan goes into default, the government can start the process for garnishment. They have to send you a notice of garnishment or offset 30 days prior. If you don’t get things settled up in 30 days, then the garnishment or offset begins.
3 ways you can lose income
After you’ve defaulted, the government has three options for collecting what you owe:
1.) Wage garnishment. The government can take 15 percent of every paycheck until your payments are brought current.
2.) Tax garnishment (AKA treasury offset). The government can withhold your entire federal income tax refund up to the amount you owe.
3.) Federal salary offset. Employees of any federal agency can have 15 percent of their disposable income diverted to paying off your defaulted loans.
Other important things to know about garnishment
Here are some common followup questions you may have: