Feds crack down on false promises to stop wage garnishment

Countless residents of Mississippi are grappling with student loans, whether they are fresh out of school or graduated many years ago. Some are able to work their loan payments into their existing budgets, while others may discuss their financial challenges with the lender in order to obtain a deferment or temporarily reduce payments. For others, missed payments may be a reality due to overwhelming financial problems such as massive debt or unemployment. In such cases, these individuals may be facing the thought of or undergoing the experience of having their wages garnished.

Just like a vehicle repossession, a wage garnishment can be very emotionally stressful, as well as potentially embarrassing. Moreover, the garnishment itself produces added financial stress, since money is taken directly from a person's paycheck. Since garnishment is such a difficult process to endure, some companies have emerged in recent years with claims of offering significant debt relief. In reality, some of these companies are scams and end up doing graduates more harm than good.

Recently, the U.S. Consumer Financial Protection Bureau decided to take legal action against two different companies, which have been accused by authorities of operating scams. According to the CFPB, the companies were making inflated promises to students regarding the help they could offer them; in addition, these companies also were charging individuals illegal fees upfront in order to help them apply for loans, even though there was no charge for applying for those loans. The CFPB has filed a lawsuit against one company and has pushed for a court order to shut the other down.

One company apparently promised borrowers that it could put a swift end to court-ordered wage garnishment. In reality, obtaining legal help through a qualified attorney is often a more promising approach to stopping problems such as garnishment or repossession. In Mississippi, filing for personal bankruptcy can stop the garnishment of one's wages. Discussing one's loan and garnishment situation with an experienced lawyer can give borrowers peace of mind regarding their loans, paychecks and future finances.

Source: Inside Higher Ed, "CFPB blasts 'debt relief' services," Michael Stratford, Dec. 12, 2014

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