Do you want to know more about how to stop an administrative wage garnishment but don't know where to start? Learn more here.
Book a Consultation CallThe impact of the pandemic has not been limited to our mental and physical health, but also our financial wellbeing. According to this CNBC news report, the average American now has an individual debt of about $92,727. It is safe to say that there are a significant number of creditors out there awaiting payments that are long overdue.
This could have various implications on individuals as well as businesses alike. In circumstances like these, it is not uncommon, but often surprising to receive an administrative wage garnishment if you have defaulted on an SBA loan.
This article explores the nature of these legal procedures and what you, as a debtor, small business, or employer can do to challenge these wage garnishments.
Let's get started by examining the definition of this procedure, first.
Administrative wage garnishment is a legal procedure. Here, a percentage of an individual's earnings is withheld and used to clear debts owed to the federal government.
Unlike wage garnishments issued for a private creditor, the federal government does not have to file suit and obtain a judgement before initiating an administrative wage garnishment.
For example, if you are in default of your and are employed, you may receive an administrative wage garnishment.
You can stop or challenge an administrative wage garnishment when:
There is an exemption for those who have been employed for less than twelve months after losing their previous job. Further, you also get a notice of the administrative wage garnishment and the opportunity for a hearing before the garnishment order can issue.
You can request a hearing to challenge the order on or before the end of this notice period to avoid wage garnishment. However, if you challenge the order after this time period the employer may continue to withhold the amount specified from your wages until a decision has been made.
You can find yourself in one of two situations:
In the first instance, you must provide evidence that demonstrates why you do not owe a debt to the creditor. Depending on your circumstances, you may have already cleared this debt, you may have been released from debt or it could be an administrative error.
In the second instance, you may have to establish that you've already cleared part of the amount. Alternatively, part of your collateral may have been sold to reduce the amount owed. Whatever your reasons are, make sure to provide records, receipts, and other evidence to prove that there has been an error on the part of the issuing authorities.
You may also challenge an administrative wage garnishment if it would be a cause of financial hardship to you. To prove this you need to submit a personal financial statement to support your claim.
In a nutshell, you must be able to demonstrate that if your employer were to follow through on the wage garnishment, you would not be able to meet your basic needs. This could include food, utilities, housing, transportation for work, medical care, and other essentials relevant to your daily needs.
Do keep in mind that you cannot use private school tuition or housing cost in excess of the average rent as a daily expense.
An administrative wage garnishment causes you and your business financial hardships and come at unfortunate moments. However, there is plenty you can do to stay afloat and challenge these orders.
Are you a business owner struggling to pay off a federal loan that exceeds $30,000? Do you have trouble managing an administrative wage garnishment? Our team of qualified SBA attorneys can help.
We provide legal assistance and representation to personal guarantors, federal debtors, and small business owners across the nation. Contact us to get helpful information and expert advice on your next course of action. Get in touch today.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy), but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. Client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but we also save him approximately $227,945 over the term of the workout.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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