Defulted student loan Help!?
i have a defaulted student loan and now they got a hold of what i was expecting from my tax refund i was counting on that money ever since my dad passed away to take care of this final expenses. i tried talking to the collection agency and said that there’s nothing they can do as far as getting my refund back. this is just making things worst is it true that if i file for bankruptcy it wont take the student loan away? any advice would help.
What you’ve experienced is called “tax offset.” Because you owe a federal debt (a defaulted student loan) your lender turned you over to the U.S. Department of Education who can take away your federal tax refunds. Your refund has gone to pay down your debt and will not be returned. Tax offset is one of the last things they want to do, but it is an option if they can’t get the debt repaid any other way.
Federal student loans can not be paid off through bankruptcy.
So If you don’t want your future tax returns offset, or your wages garnished (they can do that too) you should contact them ASAP and work out a repayment plan. And if you get one, make sure you stick to it, or next year’s return will be offset as well.
