Student Loan Garnishment? We Can Stop It!

The U.S. Department of Education has announced that it will resume collection from federal student loan borrowers whose loans are in "default"-- where payments haven't been made or arrangements for a forbearance or deferment hasn't been agreed to for at least 270 days past the first missed due date. 

The Department of Education announced that it would resume “involuntary” collections for federal borrowers with defaulted loans on May 5, 2025. Collection activity for federal student loans has been paused since March 2020.

At least 5 million borrowers currently have loans in default, and another 4 million are in “late stage delinquency,” meaning their loans are between 90 and 180 days past due. Together, these groups could bring the total number of borrowers in default close to 10 million in the coming weeks.

So if you're one of these borrowers whose loans are in or going to be in default, what can you do? Assuming you can't bring five years of missed payments current in a lump sum (and of course you can't) and aren't able to bring the loan out of default through a forbearance or deferment, your best option is a Chapter 13. In a Chapter 13, you immediately stop the garnishment, collection calls, and even bills (not only as to the student loans, but as to all of your debts) thanks to the Automatic Stay, and make payments to a Chapter 13 Trustee for 5 years. The payments are, in most cases, based on your net income, after payment of payroll taxes and deductions, your housing expense, food, insurance, gas, etc. During that entire time you are protected from collection actions so long as you make your payments to the Trustee and follow the Chapter 13 rules. This should give you time to either obtain a forbearance or deferment, or hope that collection approaches change.

If you're interested in talking about how a Chapter 13 might help, please schedule an appointment and we can go over things.