How to Oppose an Administrative Wage Garnishment (“AWG”)

In 1996, the Debt Collection Improvement Act, 31 U.S.C. 3720D or “DICA” authorized all federal agencies to order an employer to withhold 15% of an employee’s disposable pay to satisfy any delinquent debt owed to the United States. This allows the federal agencies to issue an AWG without a Court Order. The Federal Agency is also allowed to hire a private debt collector to enforce the AWG.

A collection letter/garnishment notice from a private debt collector is valid, respond. Request a hearing. If you are living paycheck to paycheck, losing 15% of your wages will cause extreme hardship; you have grounds, and the opportunity, to prevent the AWG until your financial situation improves. If you fail to request a hearing, usually you lose 15% of your wages.

How do you request a hearing? Read the collection letter/garnishment notice. There will be a deadline to request a hearing and identify the Federal Agency. Send a written notification, that you request a hearing. Identify the AWG and include a statement that you are unable to pay both the AWG and your allowable necessary ‘minimal standard of living’ expenses for yourself and your dependents. You may request access to your records at the Federal Agency. Send your letter postmarked or received by the agency, no later than the deadline on the garnishment notice and you will keep your entire paycheck unless, after your hearing, the Federal Agency determines you are able to pay both.

If you request a hearing after the AWG is issued, the AWG will not stop until you prove extreme hardship.

The ‘minimal standard of living’ varies between communities and individual situations. Some individuals have minor dependent expenses, disabled dependent expenses, high medical expenses, and/or live and work in expensive communities. You must prove the amount and the need for each expense. Request the Federal Agency to send a copy of their ‘reasonable living costs’. If they do not have their own, they may use the IRS standards for IRS ‘Offer and Compromise’, where reasonable is determined by residence location and number of dependents.

Your hearing may be on paper, in Telephone or In-Person, depending on the Federal Agency and your case. All hearings require submission of written forms and evidence.

Once you request your hearing, you will receive forms from the Federal Agency. You must complete, sign and return the forms. Make it easy for the reader of the forms to agree with you, that you are unable to pay both the AWG and support yourself and your dependents in a minimal standard of living.

Organize your information so it is easy to read and understand. You must prove that it is ‘more likely than not’ that paying the AWG creates a financial hardship to you and your dependents. You may include witness statements.

You may compare yourself with other people in ‘substantially similar circumstances’. Circumstances can include the same geographic area, the same income, and a number of dependents (dependents without catastrophic illness) and the same determination of hardship. High mortgage or car payments are generally not allowed; refer to the Federal Agency Guidelines for reasonable costs of living, explained above.

There is no automatic right to a second hearing. Be organized and thorough. Show the Federal Agency that payment of the AWG creates an extreme financial hardship. Some of the other reasons to oppose an AWG are the existence, validity, past-due status or amount of the debt or enforceability of the AWG.