Federal law provides specific legal rights and remedies to student-loan debtors facing debt collectors that threaten garnishment.
It is a tough time for people with student-loan debt. Many students need to take out loans to pay for soaring college or graduate school tuition rates. Usually, they do so with full intention to repay them when due in the expectation that once they get their degrees, they will earn enough to do so.
Unfortunately, the monthly payments are often so high that they cannot make all ends meet and sometimes it is the student loans that fall behind. When this happens, student loans may be referred or sold to debt collectors that can be ruthless in their attempts to collect these debts.
Particularly frightening can be threats that a debtor's wages will be garnished to satisfy the student loan debt. The student-loan debtor is likely only earning entry-level wages and if part of them were garnished, meaning paid directly by the employer to the student-loan debt collector instead of to the employee-debtor, the debtor may not have enough money to live on because his or her paycheck would be reduced accordingly.
While garnishment threats can be intimidating and create fear, student-loan debt collectors must comply with the Fair Debt Collection Practices Act, the main federal law providing consumer protection rights to debtors, known as the FDCPA.
When a debt collector violates the FDCPA, it becomes liable to the targeted debtor for money damages plus legal fees for each violation. Suing a collector for these violations is complicated and there are deadlines involved, so anyone facing an abusive collector of student-loan debt should speak with an attorney immediately to understand what legal rights the debtor has and for representation in an FDCPA lawsuit or other legal claim.
Garnishment limitations of the FDCPA
The FDCPA makes it illegal for a debt collector to use "false, deceptive, or misleading representation" about the debt's "character, amount, or legal status," among other things. Federal law also includes detailed requirements that when a collector tries to garnish the wages of a student-loan debtor, it provide a notice of very specific rights within a specified time frame.
These rights include the right to request a hearing, the right to a one-time rehabilitation of the loan and others. Because the law is so specific and detailed, the debtor should immediately seek legal advice from a lawyer to understand whether the garnishment threats are compliant with the law and what remedies are available.
If the debt collector misrepresents or inadequately describes the debtor's rights in the notice, the debtor may not know that he or she could pursue legal remedies to avoid garnishment.
Biber v. Pioneer Credit Recovery
Biber v. Pioneer Credit Recovery is a January 2017 case in which a federal judge in the U.S. District Court of the Eastern District of Virginia analyzes in detail whether the communications by a debt collector to a student-loan debtor that threaten garnishment could violate the FDCPA by misrepresenting pregarnishment rights.
In deciding whether the debtor stated a valid claim, the judge summarizes that if the debtor's allegations concerning the collector's communications were true, the debtor would suffer a "concrete, particularized harm to a legally protected interest when a debt collector's false, deceptive, or misleading representations could detrimentally affect Biber's decision-making with respect to his debt."
Among other issues, the court found that a letter from the collector could potentially be found "false, deceptive, or misleading" because it implies that a garnishment proceeding had already been instituted and that "garnishment was imminent" when these statements were allegedly not yet true.
Anyone facing student-loan default should seek legal advice immediately, especially if threatening letters or calls are coming in from a debt collector in the nature of those described in the Biber case.
Attorney Thomas Breeden of Thomas R. Breeden, P.C., in Manassas, Virginia, represents clients in Northern Virginia, including debtors in consumer protection matters. He also advises creditors and collectors about compliance with consumer protection laws.