Wage Garnishment for Student Loan through Financial Institution
I owe $6200.00 on a student loan I obtained through a bank in 1999. Other than occasional interest payments I have not been able to pay off the debt in full. I have received calls very sparatically from one collection agency 2-3 years ago, and now I am receiving calls from a new collection agency for the same loan. They offered to forgive the interest and drop the amount owing to 5300 if I could pay the full amount within a 2-3 day period from the first phone call. They have been threatening to garnish my wages which I have told them to do so, since I have no way to pay back the lump sum of the loan. However, they continue to suggest I borrow the money to repay the loan from lending companies with extremly high interest rates. Why is it that they would not just go ahead with the garnishment? Any suggestions as to how to approach the situation would be greatly appreciated.
Yes, most institutions will go to this trouble for significantly less than $28,000 in debt.
Many collection agents receive a commission for every dollar they collect. For them, the commission on a lump sum $5,300 payment is a lot larger than the commission they may receive on small monthly payments they may receive if they garnishee your wages.
You have a number of options. First, you could try to borrow the money, perhaps with a co-signer, although if you will be required to pay high interest rates, that is probably not a solution.
Second, you could negotiate a payment plan, such as offering to pay $200 per month until the student loan is repaid (although as discussed above they may not accept that type of plan).
Finally, you could try a debt management plan or a consumer proposal. To determine which option is best for you, contact a licensed trustee to fully explore your options.