N. Raghuraman's column: Don't take debt lightly, salary may be attached!

Stephen (fictitious name) may have half his salary at the end of this month. The US government has sent a notice to his employer in this regard this week, as he has not repaid a single installment of his education loan for 270 days, even though he started the job in April 2025. Are you wondering how the government can order a private company to deduct the salary of its employee and deposit it in the government account? This is called 'wage garnishment'. It is a legal process in which a court or government agency orders an employer to withhold a portion of an employee's earnings (wages, salaries, bonuses, etc.) in order to pay off old debts, such as outstanding taxes or a defaulted education loan. Once the notice is issued, it becomes a mandatory deduction that continues until the entire debt is paid off. It is the result of the government's legal action or court order against those who do not repay the loan. This situation is not just Stephen's; There are 30 million student loan defaulters in the US, which has forced the Trump government to intervene and take drastic action. Because during the pandemic, when the economy came to a standstill, governments around the world stopped debt repayment for a few months. This sympathetic thinking of financial institutions fostered a non-repayment mentality in the minds of many. In India, as of June 30, 2025, the total outstanding amount of wilful defaulters has reached ₹1,76,693 crore. Financial experts say that rising inflation worldwide is enlarging the list of defaulters. This may force governments in the future to take strict measures such as 'wage garnishment' to protect their banks. If you think you can join the list of defaulters that are issued every month, there is an option to avoid: consolidation of all loans i.e. converting all old loans into a new loan. This is the fastest solution for those who still need to borrow. Debt integration can organize records of payments made to different lenders. Management Tips To avoid falling behind in payments, borrowers should ensure that they choose a payment plan that can be easily maintained. This will protect against legal action. Also, it will help in improving the credit score.