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 SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
Client personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
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