Creditors can garnish your wages once they obtain a judgment from court. The judgment states the amount you owe them. The maximum total amount that can be taken from you is 25 percent of your disposable income. “Disposable pay” means the amount of money left in your paycheck after amounts required by law, like taxes, come out. However, you are always guaranteed to be left with an amount per week that is 30 times the federal minimum wage, which is now $7.25 per hour.
The government can garnish 15 percent of disposable pay to collect a defaulted student loan. They do not need a court judgment to do so.
Being subject to a garnishment is tough, but there are strategies for dealing with it. One option is to rehabilitation the loan by arranging to make payments. Another option is to consolidate out of the defaulted loan. Some people even file Chapter 13 bankruptcy cases to stop the garnishment.