In Texas, wages are considered nonexempt property and cannot be garnished. However, Texas law makes exceptions for defaulted federal student loans, non-wage income such as rental income, bank accounts and child support. Therefore, if you took out a federal student loan through the Federal Family Education Loan Program (FFLEP), Sallie Mae can garnish your paycheck. If you have a loan through Sallie Mae's private loan program, it cannot garnish your paycheck according to Texas law.
Wage Garnishment in Texas
While wages are consider nonexempt property in Texas, a creditor may still be able to file for a judgment to garnish your wages if you live in that state. This can happen if you receive your wages out of state. In this case, a creditor can file to lift the judgment from Texas and move to an out-of-state jurisdiction where wage garnishment is permitted.
Student Loan Default
Default is defined by the promissory note you filed when you signed for your student loan. Until March 2010, Sallie Mae was able to originate federal and private loans. Under Texas law, federal student loans are not exempt from wage garnishment. Therefore, Sallie Mae can pursue wage garnishment as a remedy to force you into paying your federal student loan no matter where you live, but it cannot do so if you took out a private student loan. According to Sallie Mae, you are considered in default if you fail to make payments in nine consecutive months.
Student Loans and Bankruptcy
Federal student loans cannot be discharged in bankruptcy. The federal government cannot forgive a debtor who owes a student loan under a federal loan program. The interpretation of private student loans is slightly different. A private student loan is considered a consumer debt, which may be discharged in bankruptcy. However, it is difficult to have your private student loan discharged in bankruptcy unless you can prove undue hardship.
Twenty-five Percent Rule
Federal rules place a cap on the amount of money that can be garnished from your paycheck to 25 percent of disposable personal income (DPI) or the amount that your DPI exceeds 30 times the federal minimum hourly wage, whichever is less. For example, using 30 times the federal minimum hourly wage of $7.25, Sallie Mae can only garnish 25 percent above $217.50 of your weekly paycheck.
Options
Avoid defaulting on your Sallie Mae loan if possible. Sallie Mae provides certain alternatives for students facing hardship. You can contact them to ask for a reduced payment plan. You also can ask for a deferment or forbearance, which suspends your payments for a period of time. A forbearance lasts up to one year. During that time you have the option of paying interest. In a forbearance, unpaid accrued interest continues and is capitalized. You will have to provide financial proof to qualify for Sallie Mae's alternative payment plans.
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