Legal Question in Credit and Debt Law in California

Federal Student Loan and Wage Garnishing

I recently was notified by the Texas Guarantee Student Loan Corporation that on June 26th they will begin to garnish my wages to collect a $25,000 student loan debt. My parents have all documentation for this loan, including the notice to withhold earnings. I may not be able to get any of that paperwork before that June 26th deadline. I would just like to know: a) whether the principal on a federal student loan can be negotiated, b) whether it's advisable to negotiate a repayment plan with such a company, c) whether it's legal for them to contact my employer and d) whether it's normal to get a cold call from the collector requesting a 10% downpayment before the company will commence a consolidation process.


Asked on 6/11/03, 6:12 pm

1 Answer from Attorneys
Joseph Richardson Borton Petrini LLP

Re: Federal Student Loan and Wage Garnishing

If they're getting ready to garnish you, it's because they've sued you and gotten judgment. It's always advisable to work out a payment plan. However, if they've already got judgment and the right to garnish, then they may not want to negotiate. Unless they somehow think they won't get paid(either you will quit your job or file bk), they may not have incentive to negotiate. You can keep them from contacting your work when they are attempting to collect, but they are beyond that point now. That is, they can contact your job to enforce their judgment. You should see if you can refinance this loan so that this company can be paid off and you can start fresh. I haven't heard of a ten percent down payment for consolidation. In the future, deal with your debts earlier so you don't get to this point, where there are fewer options.

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Answered on 6/17/03, 9:26 am


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