Wages Garnished for Loan Paid Off over 8 years ago

[Foolish1]

What is the name of your state? Georgia

My girlfriend has just had her wages garnished from a student loan that she obtained in 1985 that she swears that she paid off at least 8 years ago. This happened without warning after being contacted by a collection agency approx. 3 months ago. She argued with them at that time that the loan was paid off and that she has never received word from them stating that a balance was still owed. They told her that they have been trying to track her down for years so now the amount she owes has doubled from the original amount. She asked them to prove it to her which never happened.
She says that with no warning, no judgment received, etc. her company is now garnishing almost 16% of her take home pay.
Is there anything that she can do to stop this or at least fight to have some kind of documentation from them?
Lastly, she claims to have trashed all evidence of this loan being paid off just last year.
Any ideas as to how she can find out if the loan was paid off? She has a copy of her credit report from 1999 and the loan in question is not on the report.

Thanks.

 

[Chien]

Let's try to approach this systematically:

My girlfriend has just had her wages garnished from a student loan that she obtained in 1985 that she swears that she paid off at least 8 years ago.

You can't garnish without a judgment so:
A. Either she's wrong about paying off the loan, or
B. She paid the loan after it went to judgment, but she didn't pay the full amount of the judgment, or
C. She got a judgment on an unpaid loan, paid the whole thing and the judgment was never satisfied/released.
"A" or "B" are the most likely

She argued with them at that time that the loan was paid off and that she has never received word from them stating that a balance was still owed.

She should have at least written a dispute letter and sent it CRRR. Arguing on the phone just convinced them to garnish. (BTW, unless you were a party to this conversation, you don't know what happened or was said.)

She says that with no warning, no judgment received, etc. her company is now garnishing almost 16% of her take home pay.

No, it just doesn't happen that way. At some point she would have been served and later gotten notice of the judgment. It's great that you stand by your girlfriend, but someone needs to find out what really happened.

Is there anything that she can do to stop this or at least fight to have some kind of documentation from them?

Forget the documentation from them. This has gone to judgment. You're not going to get it. Go examine the court file, and see what happened, when. and how. As to the garnishment, she should at least see if she has exemption to reduce the withholding (check with the court for statutory exemptions). A Motion to Vacate the Default would stop the garnishment until a hearing but, if they've "been trying to track her down for years", it may be too late for a motion. She needs to see how process was served and judgment entered.

Lastly, she claims to have trashed all evidence of this loan being paid off just last year.

Then she has to do what she can to re-construct this from the beginning. The court file would be one place to start and the school would be another. The credit report means very little on the facts posted to date.

 

[Foolish1]

Chien,
Thank you for your quick response.
Everything you said is exactly what I said to her. Yes, something is fishy here.
The part that I have the biggest problem with is this:
You said, "At some point she would have been served and later gotten notice of the judgment."
That is the part that has me a little upset with her. Either she's lying to me or she never really knew about the judgement against her. If she's telling me the truth what is the easiest way for her to obtain a copy of the judgment?
BTW, the only reason that I have made this my business is because I am helping her get out from under financial termoil and I don't want to be taken advantage of.
Thanks again.

 

[CALIFPROLAW]

Chien,
Thank you for your quick response.
Everything you said is exactly what I said to her. Yes, something is fishy here.
The part that I have the biggest problem with is this:
You said, "At some point she would have been served and later gotten notice of the judgment."
That is the part that has me a little upset with her. Either she's lying to me or she never really knew about the judgement against her. If she's telling me the truth what is the easiest way for her to obtain a copy of the judgment?
BTW, the only reason that I have made this my business is because I am helping her get out from under financial termoil and I don't want to be taken advantage of.
Thanks again.

My response:

She was served with the Summons - - she just doesn't know it. The clue in your post was when you said, "They told her that they have been trying to track her down for years . . ." That little clue tells me that she moved from the residence that is stated on her application for the loan. That also tells me, because of that, the Summons, per court order, was published in a newspaper of general circulation closest to her former address.

When she didn't respond to the published Summons, the Plaintiff obtain a "default" and an automatic Judgment - - plus court costs, attorney's fees, and interest on the judgment.

Since she can't prove payment of the loan, the judgment stands.

IAAL

 

[Foolish1]

Thank you for all of this help.

 

[Chien]

Either she's lying to me or she never really knew about the judgement against her. If she's telling me the truth what is the easiest way for her to obtain a copy of the judgment?

I had the same thoughts as CALIFPROLAW and for the same reasons. Nobody is suggesting that your girlfriend is lying. These things can happen. As indicated, the best place to find out the circumstances of the judgment is to review the court file. If the court is now in another state or at least no longer close, call/write and purchase a copy of the records. They should be few and the cost minimal.

I would only add one comment to those made by CALIFPROLAW. In my experience, service by publication is one of the easiest forms for which a resulting default judgment might be set aside. Service by publication normally requires publication of the Summons in a "paper of general circulation" for a period of time fixed by statute. The obvious problem is that very few people actually read the daily classifeds to see if they're being sued. So the concept is fine academically but, in practical terms, it falls short. It's the "last ditch resort", and courts tend to recognize that it's unlikely to result in actual notice and a chance to defend.

So, despite the years that have passed, if the judgment was obtained in this manner, your girlfriend may still have a chance to seek to have it vacated (again, in my experience). The bigger problem is that, even if she tried and were successful, she can't prove that the loan was paid. If she was served by publication and was successful in getting a default judgment vacated, it just puts her back to a position of having to defend against liability. Until she can do that, she'll end up with a second judgment.

The thing to do is to work on proving that payment was made. If she can do that, then find out how judgment was taken despite that fact and fight to vacate the judgment (if payment was made directly to the creditor, prove it to the CA and it can get paid that way). Until she can do it, the rest of the exercise is pointless, the judgment might as well stand and the garnishment might as well continue.

 

[Skylyn]

If this was a federal SL, no judgement is needed to garnish wages. So, there may be no court file...

 

[Foolish1]

If this was a federal SL, no judgement is needed to garnish wages. So, there may be no court file...

Apparently, this is the case. Sorry but I did not realize that when I started the thread.
She called an attorney this AM and he basically told her that there is nothing that she can do because it was a Government loan and he said that they can by-pass all the rules regarding collections of unpaid student loans.
I really feel bad for her as this came out of nowhere and the amount she owes is double that of the stated unpaid principle.
I am an absolute pack-rat and have copies of credit card statements, etc. going back 15 years but I must confess that (hypothetically speaking) if the creditor of my first car from 1984 claimed that I in fact never paid off the loan, I would have no way to prove it. I guess there is no statute of limitations on these things???
Again, thank you for the helpful comments.

 

[4everblue]

Can't find proof?

There have to be records at a bank somewhere that she wrote some checks? I would think for a fee she could get them? Or statements?

I guess she hasn't had a tax return since then? They would have taken any returns by now. This is how I found out last year about my "unpaid" loan that I am now paying for again .... $800 is easier to take though.