You Have a Student Loan Garnishment? Get Relief with the CARES Act Lawsuit

The stimulus checks came and were spent. Mortgage moratoriums have ceased while people go back to work. People in America were looking forward to some type of financial relief during a ravaging pandemic that has claimed more than 102,000 American lives.

The CARES Act has provided some financial relief for American student borrowers. In addition to wage garnishments, all social security offsets and seizures of federal tax refunds were supposed to stop. However, many suffers have not received such relief even when making multiple calls to debt collectors and notifying Human Resource Departments to stop such collection activity.

The Proposed Relief

The National Consumer Law Center and the National Student Loan Legal Defense Network have filed a class-action lawsuit in the United States District Court for the District of Columbia for Case No. 20-CV-1137. The representative attorneys are Daniel Zibel, Eric Rothschild, Alexander Elson, Stuart Rossman, and Persis Yu in Washington, D.C. Betsy DeVos and the Department of Education are listed as defendants.

The Department of Education presented in court filings that 54,000 borrowers' wages continue to be garnished. The garnishments were to stop on March 13, 2020, more than eight weeks ago. Garnishments may resume after September 30, 2020.

Since so many people have yet to receive any type of financial relief, plaintiffs have reached out to the above law firms to commence class action lawsuits. Elizabeth Barber is the main plaintiff for the above lawsuit.

Elizabeth Barber

Elizabeth Barber was looking for the Coronavirus relief as described in the CARES Act. She attended Nazareth College in 2010 with a major in Psychology. After several intense classes and $10,000 in student loan debt, the load became too much, and Ms. Berber had to stop pursuing her education.

By 2019, Ms. Barber had defaulted on her student loan payments. The Department of Education does not need a court order to garnish a borrower's paycheck or bank accounts. It merely notifies borrowers that they have defaulted on their student loans. After sufficient notice, the garnishment can proceed.

Ms. Barber received her Final Notice of Wage Garnishment on December 19, 2019. Whereas by January 2020, the Department of Education had deducted $900 from her paychecks as a home health aide. This was approximately 12% of her discretionary income.

Presently, Ms. Barber continues to be employed as a home health aide. She makes $20,000 per year, but her patient load and hours have been reduced because of the current health crisis. Ms. Barber was counting on the additional financial relief to get caught up on household utility bills like water and electricity. On top of that, she has a lien on her home.

Student Loan Debt Relief

Many student loan debtors find themselves in this present predicament. The CARES Act provided borrowers with six months for relief from student loan payments and garnishments. That way, any government aid like government stimulus checks would not be garnished.

The proposed class can be quite large. The Department of Education states that approximately 285,000 borrowers had illegal wage garnishments in just March 2020 alone.

Furthermore, the Department of Education sent emails advising employers to stop garnishing wages. Many employers did not open these emails.

Most Recent Class Action Lawsuit

On May 29, 2020, another class-action lawsuit has been filed against the Department of Education. In this case, the National Student Legal Defense Network and Democracy Forward Foundation filed suit against Steven Mnuchin, The United States Department of Treasury, the Department of Education, and Elizabeth DeVos for the seizure of federal tax refunds. The case number is 20-CV-1423. This case was also filed in the United States District Court for the District of Columbia.

The plaintiff, Kori Cole, took out $23,000 in student loans to become an X-Ray technician and a Medical Assistant. She was looking forward to catching up on the family bills with her tax refund, even as her husband made $50,000 per year in the family business. However, family business operations were limited, and jobs were put on hold because of the pandemic. Then, Mrs. Cole's $6,859 tax refund was seized by the government.

Seized Tax Refunds

Surprisingly, Treasury data show that more than 11,000 tax refunds were offset in April 2020. This does not include all the unfiled Federal and State tax returns. So far, many debtors have not received any monetary refunds.

And even if the Department of Education returns borrowers the seized funds, it does not make up for the missed opportunity cost of receiving injunctive relief during the initial phases of the ravaging pandemic.

The plaintiffs are seeking refunds from illegally seized tax returns and garnishments from March 27, 2020, until the final date in September 2020, as necessary. In addition to refunds, the parties want the defendants to pay all costs, fees, expenses, and other relief as deemed appropriate by the Court.


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