#1 Student Loan Lawyer
Updated on December 10, 2022
Your spouse’s wages can’t be garnished for your student loan debt. Neither the federal government nor a private lender can garnish your spouse’s paycheck to collect defaulted student loans — even if you live in a community property state like Arizona or Texas.
Related: Are Student Loans Community Property?
Similarly, as long as you’re not listed as an owner, your partner’s bank account and home are safe from your student debt. But if you are, falling behind on your student loan payments can jeopardize both. Your lender or a debt collector may sue you. If they win, the judge will enter judgment in their favor. Depending on your state’s laws, the court order may let the creditor seize your joint accounts and place a lien on your home, which can prevent you from selling, refinancing, or borrowing a second mortgage. But your spouse’s income is safe. The creditor can’t send a wage garnishment order to their job.
Your spouse’s tax refund can be garnished if you file a joint return
Tax refunds are different. The U.S. Department of Education can seize the entire federal tax refund if you file married filing jointly. If that happens, all isn’t lost. The IRS has a process that your spouse can use to file a claim with the IRS to get back their part of the refund. Read more about tax refund offset reversal.
You could avoid that hassle altogether if you file a separate tax return. But going that route may increase your tax liability and affect your monthly payments under an income-driven repayment plan.
Your spouse’s wages can be garnished if they cosigned your loans
The only time your spouse’s wages can be garnished for your student loans is if they were a cosigner to your private student loans. The lender would still need to sue them and get a judgment before it can garnish their wages.
Before that comes to pass, you’ll typically have time to pause payments temporarily with a deferment or forbearance, or refinance to get a lower interest rate and better payment plan. The worst-case scenario? You can always file bankruptcy to stop a student loan wage garnishment. But you’ll need to file an adversary proceeding to get rid of the loans.
Related: Can Private Student Loans Be Discharged in Bankruptcy?
Your spouse’s wages can be garnished for their student loans
Your spouse’s wages can be garnished for their student debt if they default. Federal student loans default after nine consecutive monthly payments are missed. Private student loans default and are typically charged off about 6-8 months after they first become past due.
The government can garnish your spouse’s paycheck and Social Security benefits right after they default. Lenders must wait until they get a court judgment before they can garnish wages for private loans. Most companies don’t rush to court right away. They usually send the loan to a debt collection agency to work out a payment arrangement. Here’s what to do if you’re being sued for student loan debt.
In conclusion, your spouse’s wages can’t be garnished for your student loan debt. The only exception is if they cosigned your private loan application. Even then, the lender would need to sue them and get a court judgment first before they can garnish their wages. So if you’re struggling to pay back your student loans, you can breathe a sigh of relief knowing your spouse’s wages can’t be garnished.