I've asked this question below...
Can a debt collector garnish my wage without a judgment?
but thought it be better the break these up into seperate questions...

PHEA, who is acting as a debt collector to a defaulted student loan says they will deny my attempts to consolidate the debt. They'd rather get a wage garnishment. Thus they will 'deny me'.

That seems very unlikely. If I wanted to pay my debt, whether out of my own pocket or through consolidation... how can they deny me?

PHEAA have changed their tune today...
Now, it's the Consolidation Company that will deny me. Once the consolidation company sees the wage garnishment they will get cold feet and reject the debt from being consolidated. All according to PHEAA.

Consolidation is set to go down this Friday. That is unless what PHEAA says isn't complete BS.

  • 1
    Would love to hear how this turned out.
    – user4127
    Commented Mar 7, 2012 at 17:24

5 Answers 5


They have no saying about the consolidation (unless they're the ones consolidating). From their perspective they're going to be paid off. I can't imagine why would they care as to how you're going to pay them off, unless they want to rack up fees and fines and garnish from your wages much more than what you really owe.

It looks like they're trying to discourage you from even attempting a consolidation, but that means that if you don't attempt - they can later claim that you did nothing to repay the loan. Basically, they're trying to trick you into garnishing by making you give up on all your other options.

I highly doubt the legality of their tactics. Make sure to record all the communication with them, and if possible - consult an attorney. A complaint to BBB and/or your state attorney seems to be in order here.

  • I too am having trouble understanding why any creditor would prefer a garnishment to being paid out. You may be right they get more fees that way.
    – poolie
    Commented Feb 28, 2012 at 23:59
  • 1
    Depends on if they're being paid everything they think they should. The debt collector is doing exactly that, so whether it's you or someone else saying they'll pay in full, they should be overjoyed. If the debt consolidator is instead "negotiating" with your creditors to get them to accept less than the full payoff, then they could have a problem with that. Understand, however, that debt consolidation is basically a privately-handled Chapter 13. You could do exactly the same thing by filing for a restructuring, and in that case, a judge could FORCE an objecting creditor to accept the plan.
    – KeithS
    Commented Mar 8, 2012 at 19:52

PHEAA has no say over what the consolidation company does. If the consolidation company can provide you with the money to satisfy your debt with PHEAA then you should be able to close that loan.

The PHEAA could be correct that they will not consolidate that debt but if it was already approved I doubt that will happen. These are really questions you need to talk with your debt consolidation counselor about.

PHEAA would love to get the garnishment. Because with a garnishment they will get quite a bit more money as well as the ability to charge fees for their service and basically bloat the value of the debt.

PHEAA will need to go to court to get the garnishment. You have a right to be there. They can not do anything like this fast. To do that they have to prove that you are not attempting to make good on your debt. Which is why it is a really bad idea to ignore student loan debt. The best thing you can do is keep trying and get in writing from them any of their requests, demands, or threats. And also keep track of your communication where you are trying to make good on your debt.


The consolidation company (Direct Consolidation) has sent a check off to pay PHEAA.

PHEAA's claim that Direct Consolidation would get cold feet and deny me didn't happen. Although, this may just be a case that the check was sent before garnishment process was kicked off by PHEAA. One just got the ball rolling first.

Some people have mentioned here that federal lenders might not need a judgement to get a garnishment. But from what I gather from the ombudsman.ed.gov it doesn't look like they play by any special rules. Correct me if I'm wrong.

To this date, my credit report shows no judgments.

The check is in the mail. What I don't know yet is what will happen when PHEAA gets the check. Will they apply it to my account? Will they pull some more shady move? I have no idea.

I'll post more when I find out.

  • Again, it depends on whether the check pays the debt in full, and what they are allowed or required to do if it isn't. Sounds like the consolidation firm and the creditor are not talking to each other on friendly terms. If the check is less than your balance due, and they have made no agreement with the consolidator to write off the balance, then they may still try to come after you for the balance (and can still charge interest and penalties).
    – KeithS
    Commented Mar 8, 2012 at 19:57
  • If the check pays off your debt in full, meaning it is exactly the amount of your "payoff balance" which by law must include all accrued penalties as well as penalties they may be allowed to charge for early payoff, and the check arrives before the expiration of that payoff figure, then that's that; your're square with them, and there's nothing they can do, legally, to try to charge you more.
    – KeithS
    Commented Mar 8, 2012 at 20:01
  • Sounds like it worked out for you. Have you gotten confirmation from PHEAA that your obligation to them has been discharged?
    – user4127
    Commented Mar 20, 2012 at 13:17
  • Everything from PHEAA has been discharged.
    – Geo
    Commented Mar 25, 2012 at 22:32

It sounds like there are alot of missing details here. Were you in an income-based repayment program that you subsequently defaulted on? Have you sought a hardship deferment?

If you cannot make any headway with the student loan people and that ends up tanking your consolidation plan, you should at least consider Chapter 13 reorganization. That won't eliminate your obligation to pay your student loan, but it will terminate the collection activity, and you'll begin making payments via the bankruptcy trustee.


As it turns out a wage garnishment was put on me. No Judgements on my credit report, just a letter from my employer letting me know in two days a wage garnishment would start per PHEAA's request.

Luckily I got the letter on the day that particular loan was set to consolidate. I got PHEAA to fax my employer to stop the garnishment. I got lucky.

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