The bank is taking my entire paycheck...
in Banking, Insurance & Loans ·
Hi everyone,
I’ve been scouring this forum and the rest of the web, but I can't find any concrete information on this. I'm really hoping someone here can point me in the right direction.
To get straight to the point, a friend of mine has landed himself in—to put it politely—a complete shitshow. 🙄
He’s a full-time, permanent employee at a firm based in San Francisco, earning roughly $1.50 (it fluctuates month to month depending on his hours).
Recently, he took out a 10-year loan from the bank to clear out some old debts he was carrying, with monthly payments set at $633. Because it's a formal arrangement, there's an administrative garnishment on his wages, meaning the payroll department deducts those $633 immediately.
On top of the loan, he's also dealing with child support garnishments, which work just like the loan deduction, $667 directly from his paycheck, because he wasn't keeping up with his previous obligations. At least with this, we know it's going to be a recurring monthly hit.
Based on his total salary of $1.50, the payroll office takes out both the loan and the support payments, totaling $1300. This leaves him with a measly $167 hitting his bank account every month.
I think I heard somewhere—or maybe read it—that in cases like this, loan repayments (and general debt collection) are legally capped at a MAXIMUM of 1/3 of one's income. And by "income," they mean what's left AFTER the child support is deducted.
So, if his gross pay is 4400 and the support is 2000, he's left with $733, which would be considered his actual disposable income.
By that logic, his loan payment should only be 1/3 of $733 = 733.33 dollars.
If this is actually true, could someone please direct me to the specific law or regulation that backs this up? If he can prove it, he might be able to go to the bank and negotiate an extension on the term to bring the monthly payment down to that $733 mark or even $267. I'd much rather he pay it off over a longer period than live like this. He doesn't own a house, he doesn't have a car, he has nothing. He’s living with his parents and it's nearly impossible for him to survive on just $167 (he's constantly overdrawn, and he can't even use a credit card).
Thanks in advance to everyone for any info you can provide! 🙏
I’ve been scouring this forum and the rest of the web, but I can't find any concrete information on this. I'm really hoping someone here can point me in the right direction.
To get straight to the point, a friend of mine has landed himself in—to put it politely—a complete shitshow. 🙄
He’s a full-time, permanent employee at a firm based in San Francisco, earning roughly $1.50 (it fluctuates month to month depending on his hours).
Recently, he took out a 10-year loan from the bank to clear out some old debts he was carrying, with monthly payments set at $633. Because it's a formal arrangement, there's an administrative garnishment on his wages, meaning the payroll department deducts those $633 immediately.
On top of the loan, he's also dealing with child support garnishments, which work just like the loan deduction, $667 directly from his paycheck, because he wasn't keeping up with his previous obligations. At least with this, we know it's going to be a recurring monthly hit.
Based on his total salary of $1.50, the payroll office takes out both the loan and the support payments, totaling $1300. This leaves him with a measly $167 hitting his bank account every month.
I think I heard somewhere—or maybe read it—that in cases like this, loan repayments (and general debt collection) are legally capped at a MAXIMUM of 1/3 of one's income. And by "income," they mean what's left AFTER the child support is deducted.
So, if his gross pay is 4400 and the support is 2000, he's left with $733, which would be considered his actual disposable income.
By that logic, his loan payment should only be 1/3 of $733 = 733.33 dollars.
If this is actually true, could someone please direct me to the specific law or regulation that backs this up? If he can prove it, he might be able to go to the bank and negotiate an extension on the term to bring the monthly payment down to that $733 mark or even $267. I'd much rather he pay it off over a longer period than live like this. He doesn't own a house, he doesn't have a car, he has nothing. He’s living with his parents and it's nearly impossible for him to survive on just $167 (he's constantly overdrawn, and he can't even use a credit card).
Thanks in advance to everyone for any info you can provide! 🙏