A question about Wage Garnishment for Student Loans

[wisone]

What is the name of your state? Wisconsin


Recently, the department of Education started garnishing my wife's paychecks, for 15% for student loans.

My question, is what is considered "disposable income"? According to my wife's employer, it's 15% of what's left after taxes are taken out. Everything we've read online(including the Employer's Handbook from the Department of Education) say disposable income is what's left after taxes, AND health insurance premiums.

It makes a big difference to us, as $600 is taken out of every paycheck for health insurance. So who is correct?

[JETX]

Originally Posted by wisone

My question, is what is considered "disposable income"?

From: Wisconsin "Employers’ Guide to Income Withholding" and though it is specifically for child and medical supports, the same rules apply to judgment garnishment.

Disposable income is the employee’s earnings remaining after federal, state and local withholding taxes and Social Security taxes are deducted. Deductions for Individual
Retirement Accounts (IRAs), medical expense accounts, etc. do not reduce disposable
income.
[url]http://www.dwd.state.wi.us/dwd/publications/dws/child_support/pdf/dwsc_11742_p.pdf[/url]

Click here for a copy of the form you can file with the court to try to challenge the garnishment:
[url]http://www.wicourts.gov/formdisplay/CV-424.pdf?formNumber=CV-424&formType=Form&formatId=2&language=en[/url]

[wisone]

That's what I originally thought, but according to the Department of Educations website, federal law supersedes state law. [url]http://www.ed.gov/offices/OSFAP/DCS/Employers_Handbook.pdf[/url]

The federal law defines 'disposable income' as this:

"For purposes of Wage Garnishment Order, “disposable pay” means the employee’s compensation (including, but not limited to, salary, overtime, bonuses, commissions, sick leave and vacation pay) from an employer after the deduction of health insurance premiums and any amounts required by law to be withheld. Proper deductions include Federal, State, and Local taxes, State unemployment and disability taxes, social security taxes, and involuntary pension contributions, but do not include voluntary pension or retirement plan contributions, union dues, or amounts withheld pursuant to a court order, and the like."

So I guess i'm wondering, what parts of the federal law supersede state law? All of it, or just certain parts? It appears that her employer is using the state's definition, and not the federal?

Also, will filing that form to challenge the garnishment even apply? There was no court date, or judgement. According to some federal law, the dept of ED doesn't need one to garnish for student loans.

[Saponificator]

AWG or Administrative Wage Garnishment is authorized by congress and the rules are the same in all states. Has your wife talked to her employer with the page from the employer handbook that indicates that health insurance should be taken into account? If they refuse, contact the Department of Education for help.

[wisone]

We've talked to ECMC, and they stopped the garnishment, and got her on a rehabilitation plan, so everything's good.