Por Agustina Troiano
En esta noticia
In the United States, the federal government can order an employer to withhold up to 15% of an employee’s disposable pay to collect a past-due non-tax federal debt, without first obtaining a court order. This process, known as Administrative Wage Garnishment (AWG), can be used to recover certain eligible debts, including those handled by the Small Business Administration (SBA).
In the case of the SBA, the measure can apply to people who owe eligible agency loans and are not meeting their payment obligations. However, not all past-due loans are automatically subject to garnishment, since the debt must meet the requirements of the administrative process.
Before the withholding begins, the person must receive written notice with information about the debt and their rights. Available options include challenging the amount claimed, requesting a hearing or seeking a payment agreement acceptable to the agency, although requesting a hearing does not guarantee the debt will be canceled or that collection will be suspended in all cases.
What federal debt can trigger up to 15% wage garnishment without a court order
Administrative garnishment can be used to collect a past-due non-tax federal debt, such as an eligible debt tied to an SBA loan. The agency can order the employer to withhold part of the employee’s disposable pay and apply it to the debt, without first having to obtain a court order. The authority is set out in federal law and in the rules governing collection of these debts.
The general limit is up to 15% of disposable pay, which does not necessarily equal gross pay. To calculate it, income is measured after certain deductions such as taxes, health insurance premiums and certain mandatory retirement contributions. The agency must send written notice at least 30 days before starting the process, stating the nature and amount of the debt, informing the person that it seeks to collect it through wage withholding and explaining the person’s rights.
How to request a hearing to challenge wage garnishment
People who receive notice may request a hearing in writing if they believe they do not owe the debt, disagree with the amount claimed or challenge the proposed payment terms because of financial hardship.
If the process is handled by the Treasury Department or a collection agency acting on its behalf, the person must follow the instructions in the notice they received. To have the hearing before the withholding order is sent to the employer, the request must be filed within 15 business days after the notice is sent. Otherwise, a hearing can still be held, but the garnishment process could move forward while it is pending.
What SBA form allows you to request a hearing to challenge the debt
When the SBA itself starts the process through its National Disaster Loan Resolution Center, it has a specific form called the AWG Hearing Request Form. That document allows the user to request a hearing to challenge the existence or amount of the debt, or the payment terms in permitted cases. However, the SBA says its form should not be used for loans whose collection is handled by Treasury, since in those cases the instructions in the relevant notice must be followed.
Requesting a hearing does not guarantee that the debt will be eliminated or that wage withholding will be stopped for good. The outcome will depend on the arguments, the documentation submitted and the rules that apply to the case.