Stop Wage Garnishment - Houston, TX

Stop Wage Garnishment - Houston, TX

What is a Wage Garnishment?

A garnishment involves collecting money from a defendant whether directly or from a third party.  Texas law allows for garnishment of judgment debts.1 Importantly, Texas law limits garnishment of current wages.2

Generally, a judgment credit can garnish bank accounts in Texas but not wages.  Wages and bank accounts can be garnished for child support obligations, federal taxes, criminal restitution and federally-guaranteed student loans.

While the amount of each pay check may be limited by applicable law, garnishments generally disrupt cash available to the garnishee (the person whose wages are garnished).

A Chapter 7 bankruptcy or a Chapter 13 reorganization may be effective to stop or limit garnishments. 

A dischargeable debt may be limited in a Chapter 7 proceeding.

Garnishment of a debt that is not subject to discharge may still be limited by a Chapter 13 reorganization.  By way of example, garnishment of a tax debt may be stopped and the debt or such portion as is owed may be paid through a multi-year reorganization.  As another example, child support arrears may be paid through a Chapter 13 reorganization while ongoing child support continues to be paid.

How We Can Help With Wage Garnishment?

Sometimes there are not easy answers to garnishment problems. 

If you are subject to a wage garnishment or if you have received a notice of intent to levy from the IRS, you should talk to a qualified consumer bankruptcy attorney to determine your rights.

Recent data from the U.S. Department of Education indicates that approximately one-third of borrowers with student loans were more than five days late on a student loan.  Estimates indicate that six to seventeen percent of loans are more than thirty days late. 

Should the student loan lenders and loan servicers be worried about the delinquencies?    Not really.  Government-backed student loans continue to gather interest until paid.  Various federal laws assist the lenders to collect  student loans.  Student loans are generally not dischargeable in bankruptcy.

Section 523 (a) (8) of the Bankruptcy Code allows discharge of student loans in bankruptcy only upon a showing that the student loan imposes an undue hardship on the borrower.  While this would seem easy to demonstrate, the standard applied by the courts requires the debtor to demonstrate that:

  • Making payments on your student loan will not allow you and your dependents to maintain even a minimal standard of living,
  • That there is almost no chance that your financial situation will change, and
  • That you have made a good faith effort to repay the loan.

Student loans are easy to get for college, graduate school and many other forms of education. Examples include culinary arts, mechanics, carpentry, locksmith, drafting, cosmetology, truck driving and many other trades.  The main loan servicers that manage federal student loans are Navient Corp. (formerly Sallie Mae), Nelnet, Inc., Great Lakes Higher Education Corp. & Affiliates, and Pennsylvania Higher Education Assistance Agency aka FedLoan Servicing.

Taking on a student loan for a traditional college seems to be a step toward a brighter future.  College graduates may earn significantly more money than persons who do not attend college. See “The Economic Value of College Majors” published by Georgetown University’s McCourt School of Public Policy (https://cew.georgetown.edu/wp-content/uploads/Exec-Summary-web-B.pdf, Anthony P. Carenvale, Ban Cheah and Andrew R. Hanson, 2015).

On the other hand, for-profit colleges may not provide the expected step up the ladder to economic prosperity.  In “HomeRoom,” the official blog of the U.S. Department of Education, it is reported that for-profit colleges represent only about 13 % of the total higher education population, but account for about 31% of all student loans and about 50% of all student loan defaults.  See “Fact:  Too many career-training programs lead to low wages, high debt.” (https://cew.georgetown.edu/wp-content/uploads/Exec-Summary-web-B.pdf).

Should You or Your Family be Worried About Student Loan?

Yes, you should be very cautions.  Because of government backing, student loans are deceptively easy to get.  Because of federal law and government policy, student loans continue to accrue interest until paid and adversely affect lives of the borrower and the borrower’s family.

Important Concepts About Wage Garnishments

Be cautious about taking on a student loan.   Be particularly cautious if the loan is to attend a for-profit college or career-training school.

Be cautious about guaranteeing a student loan for anyone else.

If you have a student loan, recognize that you will likely need to pay it.

If you have a student loan that you cannot pay:

  • seek help through the Department of Education for deferments and other programs, and 
  • talk to a qualified consumer bankruptcy attorney.

[1] See Texas Civil Practices & Remedies Code Sec. 63.001 

[2] See Texas Civil Practices & Remedies Code Sec. 63.004.

 

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