A student loan company or SBA creditor can garnish borrower’s wages without first obtaining a court order.

The answer is “yes”

Many people ask whether or not a student loan company or SBA creditor can garnish their wages without first obtaining a court order.  The answer is “yes”.garnish wages   The following is a direct quote from an article by the Bureau of Fiscal Services an “administrative Wage Garnishment (AWG) is a debt collection process that allows a federal agency to order a non-federal employer to withhold up to 15 percent of an employee’s disposable income to pay a nontax delinquent debt owed to the agency.

Treasury, on behalf of the federal agency, is authorized to issue a wage garnishment order to collect the debt. Under federal law, a court order does not need to be obtained.

The employer will be required to send the amounts deducted to Treasury for payment to the federal agency.

The AWG process is governed by federal law. State laws do not apply.

garnish wagesA debtor is entitled to a hearing before AWG begins if it is requested within 15 business days after the AWG notice letter is mailed. The federal agency may continue the AWG process if a hearing is requested after the 15-day period. A hearing may be requested concerning the existence or amount of the debt, or the terms of the proposed repayment schedule under the garnishment order (hardship).

The federal agency will determine whether the hearing will be oral or written. If the agency decides to hold an oral hearing, the agency will decide when and where the hearing will be held, and the debtor may decide whether the hearing will be in-person or by telephone. The debtor will have to pay any travel expenses for an in-person hearing.

This process is authorized by section 31001(o) of the Debt Collection Improvement Act of 1996 (DCIA), codified at U.S.C. 3720D. The rules and procedures governing AWG were published as a Final Rule (31 CFR 285.11) in the Federal Register on May 6, 1996 (63 FR 25136). In accordance with the Final Rule, Debt Management Services (DMS), Bureau of the Fiscal Service (Fiscal Service), formerly the Financial Management Service, U.S. Department of the Treasury, promulgated Standard Form 329 (SF-329), which federal agencies are required to use to issue AWG orders.”

Forms are available for the borrower to request a hearing regarding the terms of the repayment schedule (hardship), “a financial statement” with supporting documentation must be submitted with the hearing request form received with the notice letter.”


I provide this information because many people believe their wages are protected until a creditor obtains a judicial order permitting garnishment of wages. Unfortunately, they are very surprised when their paycheck is garnished without notice. That garnishment starts an avalanche of bounced checks, NSF fees and aggressive creditors calls and lawsuits.

Published On: March 19th, 2015By Categories: Collection companies & Debt buyers, Credit Report, Student LoansComments Off on Garnishment of Wages – Administrative ActionsTags: , ,

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Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys. *Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*