What can I do about a debt collector that wants more money a month than I can afford?

UPDATED: Jan 11, 2012

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What can I do about a debt collector that wants more money a month than I can afford?

My student loans went to collections. They told me that I had to pay $290 for 10 months without missing a payment or they will garnish my wages. After I informed them of my monthly income, number of dependents and monthly bills, I had $100 remaining for food and gas. They said, “Too bad, you better find the money.” I have been able to borrow the money for the past two months but I can’t do that anymore. What can I do so my wages don’t get garnished??

Asked on January 11, 2012 under Bankruptcy Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You probably can't do anything, unfortunately:

1) A creditor (or their collections agency) does not have to work with you. Once you default on a loan, they are entitled to seek payment in full immediately. They may also offer whatever terms they want to you (e.g. $290/month for 10 months) and do not have to compromise or set terms you can afford. If you don't accept their terms, they can take legal action, including seeking wage garnishment.

2) Assuming these were in some way government backed, supported, insured, etc. student loans, then you cannot discharge them in bankruptcy.

If/when they attempt to garnish, you can ask the court to take cognizance of your income and obligations in setting the amount of garnishment--the judge is not bound to consider this, but may, especially if you document your finances well and clearly have cut to the bone to try to meet your obligations (e.g. don't show up showing that you pay $90/month for a premium cable package--you'd be expected to do without TV or with only the most basic service).

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