What options do I have if my wages are being garnished because of a student loan default? How?

The Dept. of Education has a number of programs, including income-based-repayment. Call the DOE in DC or at their local office if they have one, and ask about applying for such a program. The collectors who called you cannot garnishee your wages without first getting a judgment. And even then, a certain part of your earnings (and for some people, all their earnings) are exempt. You may very well be 'judgment-proof' at least at present. I don't think a bankruptcy would do you much good, but you may wish to consult an experienced BR lawyer in your area.

If you make $1,000 a month, I doubt that they will get anything in a garnishment. There are limits on how much can be garnished from wages. The lower limit is that there can be no garnishment if your take home pay is less than $217.50 a week. Since you make $1,000 a month, after taxes, I'd be surprised if your weekly take home pay is more than $217.50 Even if your pay is higher the limit that can be taken from pay over $217.50 is 25%. So if your take home pay is $237.50, the garnishment would be for $5.00 that week. You should check into alternative repayment schedules, like the "pay as you earn" program which limits payments to a percentage of your disposable income?

A lot of people are in the same situation as you. Once a student loan gets into default, collection costs can be added to the total you owe which can be astronomical. With a federal student loan, garnishment can take place without a court proceeding. If the loan is in the private sector, the creditor can sue to obtain an order allowing garnishment of your wages. Frankly, your wages of $250/week are too small to be garnished, but the debt will continue to grow with interest and attorneys fees for which you will pay dearly for down the road. If you are garnished, an expensive solution can be a chapter 13 which will protect you for up to 5 years provided you make payments that the court determines you can afford.

Contact the student loan ombudsman in Washington, D.C. Bankruptcy does not discharge student loans and the amount you can be garnished is limited by state law. It is unlikely that they could get $700 out of a $1000 monthly salary. $250 is a more likely monthly garnishment on your salary. There are other options but the debt collectors don't have an obligation to explain them to you. That's why you need to speak to the ombudsman.

See an attorney. In Michigan garnishment are capped at 25% of after tax income. Something is wrong here.