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Can student loan garnish 401K?

James Washington

in Student Loans

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1 answer

William Cain on January 16, 2019

Title 20, united States Code, section 1095a: "(a) Garnishment requirements notwithstanding any provision State law, a guaranty agency, or the Secretary, in the case of loans made, insured, or guaranteed under this section and part C of subchapter I of chapter 34 of title 42 that are held by the Secretary, you can decorate the willingness to pay of an individual to collect the amount owed by the individual if he or she is not currently making required repayment under a repayment agreement with the Secretary, or, in the case of a loan guaranteed under part B of this section in which the guaranty agency received reimbursement from the secretary under section 1078(c) of this title, with the guaranty agency holding the loan, as applicable , provided that: (1) the amount deducted for any pay period may not exceed 10 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the person involved; (2) the person shall receive written notice sent by mail to the person at the last known address, with a minimum of 30 days prior to the initiation of the proceedings, the guaranty agency or the Secretary, as appropriate, informing such individual of the nature and amount of the loan obligation to be collected, the intention of the guaranty agency or the Secretary, as appropriate, to initiate proceedings to collect the debt through deductions from pay, and an explanation of the rights of the person under this section; (3) the individual must have the opportunity to inspect and copy the records related to the debt; (4) the person must always be an opportunity to enter into a written agreement with the guaranty agency or the Secretary, under terms agreeable to the Secretary, or the head of the guaranty agency or his or her delegate, as appropriate, to establish a schedule for the payment of the debt; (5) the person will always be an opportunity for a hearing in accordance with subsection (b) of this section at the determination of the Secretary or the guaranty agency, as appropriate, relative to the existence or amount of the debt, and, in the case of an individual whose repayment schedule is established other than by a written agreement in accordance with paragraph (4), concerning the terms and conditions of the payment schedule; (6) the employer shall pay to the Secretary or the guaranty agency as directed in the withholding order issued in this action, and shall be responsible for, and the Secretary or the guaranty agency, as appropriate, you can sue the employer in a Federal or State court of competent jurisdiction to recover, any amount that such employer fails to withhold from wages due an employee following receipt of such employer of notice of the withholding order, plus attorneys ' fees and costs, and, in the court's discretion, punitive damages, but such employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph; (7) if an individual has been reemployed within 12 months after having been involuntarily separated from their employment, cannot be deduced from the willingness to pay of such individual until the individual has been reemployed continuously for at least 12 months; and (8) an employer may not discharge from employment, refuse to employ, or taking disciplinary action against an individual subject to wage withholding, in accordance with this section by the fact that the individual's wages have been subject to garnishment under this section, and such individual may sue in a Federal or State court of competent jurisdiction any employer who takes action. The court may award attorney's fees to a prevailing employee and, in its discretion, may order reinstatement of the individual, punitive damages and the payment of wages to the employees, or the purpose of the compensation that may be reasonably necessary. (b) Hearing requirements A hearing described in subsection (a)(5) of this section shall be provided prior to the issuance of a seizure order if the individual, on or before 15 days following delivery of the notice described in subsection (a)(2) of this section, and in accordance with procedures that the Secretary or the head of the guaranty agency, as appropriate, may prescribe, files a petition requesting a hearing. If the individual does not file a petition requesting a hearing prior to such date, the Secretary or a guarantee agency, as the case may be, shall provide the individual a hearing under subsection (a)(5) of this section, upon request, but the hearing shall not be submitted prior to issuance of a seizure order. A hearing under subsection (a)(5) of this section may not be made by a person under the supervision or control of the head of the guaranty agency, except that nothing in this sentence shall be construed to prohibit the appointment of an administrative law judge. The hearing officer will issue a final decision at the earliest practicable date, but not later than 60 days after the filing of the hearing request. (c) Notification requirements the notification to The employer of the withholding order shall contain only the information that may be necessary for the employer to comply with the withholding order. (d) No attachment of student assistance Except as authorized in this section, without prejudice to any other provision of Federal or State law, no grant, loan, or work assistance awarded under this section and part C of subchapter I of chapter 34 of title 42, or property traceable to that assistance, shall be subject to seizure in order to satisfy any debt owed by the student awarded aid, apart from a debt owed to the Secretary and arising under this subchapter and part C of subchapter I of chapter 34 of title 42. (e) "Disposable pay" defined For the purpose of this section, the term "disposable pay" means that part of the compensation of any individual from an employer remaining after the deduction of any amounts required by law to be withheld ." (emphasis added) My guess is that amounts already in your 401(k) should be safe from the action in accordance with this statute because your 401(k) plan is a personal asset and not "disposable pay" per 20 U. S. C.§1095a(e). Prospectively, however, amounts directed by your employer into your 401(k) are not safe as these amounts would be considered disposable pay, as they are not amounts required by law to be withheld, and should be sent by your employer directly to the creditor. The federal government also has a cause of action to sue on the note. A judgment lien obtained may be collected in any ordinary trial of lien can be foreclosed on. All you have to do is go to proceedings in aid of execution and you have to disclose your assets, including your 401(k) plan. Then all you have to do is to satisfy the lien of the profits, which means that to obtain a court order that orders the institution holding the account to pay.

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