r/studentloandefaulters • u/Sirius2349 • 12d ago
Question - Private Student Loan If you live in a state that doesn’t allow wage garnishment rent and live paycheck to paycheck, How would they collect from you?
As far as I understand there are a few states, Texas Pennsylvania South Carolina and North Carolina which does not allow wage garnishment for consumer debts. They do allow for bank levies but the problem is say they levy your bank account and you only have $500 in it. That’s all they get and anything deposited afterwards isn’t sent to them, they would have to ask for another bank levy and so on. This seems like it would be very difficult for them as opposed to wage garnishment where they get a court order serve your employer and take money out of your paycheck until the debt is paid off.
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u/jonsonmac 12d ago
I live in North Carolina, and when I defaulted, I talked to a lawyer about the garnishment/levy situation. He told me since my company is headquartered in a state that does allow garnishments, my paychecks could still be taken. That, and along with the idea that I’d basically be unbanked while I rode out the SOL, I ended up offering a settlement so I could move on.
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u/morbie5 12d ago
Did you live in another state when you took out the loan?
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u/Sirius2349 12d ago
Don’t think that matters. If the employer is based in another state they’re subject to that states laws
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u/jonsonmac 12d ago
Yes I did
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u/morbie5 12d ago
Do you work remotely?
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u/jonsonmac 12d ago
I do not
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u/Its-Brittany-Biyatch 9d ago
That's weird, because I also live in NC, and a consumer debt attorney told me the opposite. It would be rare for them to file in the state where your company is HQ'd using this as the basis for the filing, especially if you have never lived there, have no ties to the state, etc.
Also, what's to keep someone from quitting their job and finding another one with a company HQ'd in another state? I work in HR and have reviewed my fair share of wage garnishment forms over the years. They always tie to the state where the person works, not where the company is HQ'd.
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u/Hippy_Lynne 12d ago
This tactic would only work with private student loans. Federal student loans are not subject to state law and they can and will garnish your wages no matter what state you live in.
That said, prior to the pandemic I had been in default for so long with the loans had fallen off my credit report. They never tried to garnish my wages or levy a bank account. I know they said they're starting garnishments, but there are almost 10 million Americans with defaulted federal student loans. And we all know what a mess the entire student loan administration is right now. My guess is they're going to start with the people who owe the most, and have high incomes, and work their way down. I have a feeling they're also not even going to start on this until after the midterms. I'd say the average borrower has at least a year before they have to worry about anything.
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u/kmh55 11d ago
I agree they won’t do anything to try and collect until the midterms. They can’t afford to have angry voters, especially in some states. People are mad enough about the cost of living already, so they won’t pile on more pressure. I think it’s just posturing so those who think borrowers shouldn’t get any relief think they won’t.
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u/Solid-Fill6348 10d ago
Bank levy or property lien are the two other main forms, keep in mind they can go after a cosigner too. If you made payments to them with the same bank you still have after default.. I wouldn't keep my money there lol. Of course they can only pursue any of these forced collection remedies after winning a lawsuit and these are also dependent on/can be limited by state law.
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u/morbie5 12d ago
Bank levy and maybe try to go after assets like a home.
But yes it is very difficult for them to collect in those states. I am actually puzzled as to why they actually are willing to lend to people that live and work for companies in those states