There’s a lot of talk right now regarding student loans and many people are wondering if not paying back the money they borrowed to attend college might be an option. Whether you are experiencing financial hardship and unable to make loan payments or you are thinking about defaulting on your loan as a political statement, there are several things you need to know before you start skipping payments.
First and foremost, you need to realize the Department of Education and/or any lender involved with your loan will take action to collect on the debt. No matter what you’ve heard or what you think might happen in the future, for the moment the money needs to be repaid or you will face consequences.
The government guarantees federal loans for college, and if you default the Department of Education might refer the matter to the Department of Treasury, which means your tax refund can be confiscated to pay for your student loan debt. It is possible for your entire tax refund to be taken and put toward your student loan debt, even if your refund is shared with a spouse. This is known as tax offset and it is something you can fight back against, but you are unlikely to win if you indeed owe the debt.
It is a law that you must be notified in advance of a tax offset. There are a few things you can do to stop the action, including speaking to the Department of Education and arranging a payment schedule to make up for the payments you missed. Another option is to prove to the Department of Education that you are experiencing financial hardship. In this case they might modify the offset actions. More information about tax offset can be found on the government’s student debt relief website.
Another option if you are facing financial hardship that interferes with your ability to make student loan payments is to file for bankruptcy. Bankruptcy will not dispose your student loan, but it can stop a tax offset on a defaulted loan through the automatic stay. Filing can also free up money that is currently going toward other debts to be paid to your student loan.
Whether you choose to file for bankruptcy or you want to approach your student loan burden in another way, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to schedule a consultation and to discuss your options regarding your student loan.
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