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Dwayne B.
Dwayne B., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 26810
Experience:  Practicing for over 20 years and handled many cases and trials for consumers.
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I received a garnishment for my defaulted student loans totaling

Customer Question

I received a garnishment for my defaulted student loans totaling over $14,000 with penalties and interest. The original amount of these loans, (there was 2 of them) was under $5,000 which I am now in a position to pay outright. My question is, I heard somewhere that a person could call some somewhere and make arrangements to pay the original amount owed or is it that now that I have the garnishment am I bound to it or can I just pay the original amount I owe and be done with it
Submitted: 10 months ago.
Category: Consumer Protection Law
Expert:  Dwayne B. replied 10 months ago.

Dwayne B. :

Hello, and thank you for contacting Just Answer. I am an expert here and I look forward to assisting you today.

Customer:

hello

Dwayne B. :

You can certainly negotiate with the lenders but there is nothing (no law or statute) that says they have to accept the original amount in full and final payment and they usually don't.

Customer:

so I'm stuck with the garnishment?

Dwayne B. :

However, just because a garnishment has been issued doesn't mean that you can't negotiate with them.

Dwayne B. :

No, you can try to pay it off, offer them an amount to withdraw the garnishment, etc.

Customer:

but they don't have to accept it

Dwayne B. :

It isn't like a regular loan though because they know the odds are in their favor as far as collecting.

Dwayne B. :

No, they don't have to accept it.

Customer:

so I'm stuck with the garnishment

Dwayne B. :

There is an internet rumor that says if you offer the original amount plus interest then the lender has to accept it but that is just a myth.

Dwayne B. :

The most I have ever known them to reduce the amount by is 20% and that was for a couple of people I know who paid off six figure amounts in one lump sum.

Customer:

wow

Customer:

so after they get their $14,000 am I still in default?

Dwayne B. :

The total of the loans plus all of the penalties and interest is $14k?

Customer:

yes

Dwayne B. :

If you could pay that amount then it would no longer be in default.

Dwayne B. :

However, they will keep adding on interest and penalties as long as they can.

Customer:

I can pay the original $5,000 but not $14,000

Dwayne B. :

You can certainly ask them if they'll accept it but the chances of them agreeing are very, very slim.

Customer:

so I'll probably end up paying more then the $14,000

Dwayne B. :

Yes, if you pay it out.

Dwayne B. :

They are going to continue charging interest.

Customer:

even though they are being paid?

Dwayne B. :

Yes, they continue charging interest as long as the debt is outstanding.

Customer:

If by some freak of luck I catch someone in a good mood and they accept my offer of the original amount plus what they've already collected, would I still be in default?

Dwayne B. :

No, that will remove you from default.

Customer:

ok, I appreciate your help. any other advice u want to add?

Dwayne B. :

No, not really. The only thing I can add if you don't pay it off is that you may want to ask for an itemized listing to make sure that you haven't been charged twice or been charged interest on interest.

Customer:

what do you mean by interest on interest?

Dwayne B. :

They can charge you interest on the original amount, let's say the $5000. Every now and then you see where they add interest to the amount and then charge interest on that amount (ex. add $100 for interest to the amount making it $5100 and then charge interest the next time on $5100).

Dwayne B. :

They aren't allowed to do that. I'm not sure if they can charge interest on the penalties or not but you would want to take the position that they can't and then make them show you where they can.

Customer:

then wouldn't they have been doing that all along to get the total up to 14k?

Dwayne B. :

No, probably not. It is certainly possible but it is rare for this to happen. It's worth checking though.

Customer:

thank you. every little bit helps.

Dwayne B. :

You're very welcome.

Dwayne B. :

Anything else before I exit to help others?

Dwayne B., Lawyer
Satisfied Customers: 26810
Experience: Practicing for over 20 years and handled many cases and trials for consumers.
Dwayne B. and 7 other Consumer Protection Law Specialists are ready to help you
Expert:  Dwayne B. replied 10 months ago.
Best wishes to you!
Expert:  Dwayne B. replied 10 months ago.
Thank you very much for the Positive Rating. Please come back and visit us if you have any new questions and feel free to ask for me by placing “FOR DWAYNE B” in the subject line or as the first words of your question and I will pick up as soon as I see it.

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