One of the worst things about that paying your student loan debt is that the government will try to get its money any way it can. They don’t care what you’re going through or dealing with. As long as they’re getting their money, they’re happy. But if you go into default and start struggling to pay back your loans, they will come after you.
The process is such a burden on so many Americans that every single Democratic candidate is making student loan debt one of their top priority campaign issues. One of the ways that come after you is by stealing your tax refund right out from underneath you. The Department of Education will refer your account to the Department of Treasury for collection. They can even steal your spouse’s refund.
So, if you owe the Department of Education any money, they won’t hesitate to take your and even your spouse’s tax refund to get what they’re owed. That can cost you thousands of dollars, especially if you’re expecting a tax refund this year. The best thing to do, especially if you’re well into default, is to expect this to happen and not to receive your refund. But, if you need your refund, there are a few ways around it.
The first step in knowing whether your taxes will be offset is whether the department has issued your defaulted student loan with a collection agency. This collection agency one sure that your refund is withheld by the IRS to go directly into student loan debt. Using this method, the IRS must send you a letter with the proposed offset so that you can see for yourself where your money is going.
How to Prevent the Offset from Happening
You may not have any choice in the matter, as the government will get their money anyway they can. But there are a few ways that you can help prevent them from stealing your tax refund. One of those ways is getting back on the books and out of delinquency. There are several ways to do this, but you must return to paying your monthly payments.
The first is by consolidating into a direct loan program. This mean that all of your loans are bundled up with a new lender, essentially pulling alone out of default and forcing it into good standing. You’ll even be able to choose the right type of repayment program that is right for you so that you’re not paying more than you can afford each month.
There’s also the long way of rehabbing your standing with your lender. You have to come together and agree on a new affordable and reasonable repayment plan and get back into making on-time payments. It might take about nine months to get back in the green, but at least doing something and they won’t steal your tax refund from you.
It’s important to understand that your student loans are your responsibility. It’s not a responsibility that you can or should try to avoid. Not paying your student loans will always hurt you in the end. Whatever you have to do to get current, do it. Re-consolidate your loans, refinance your loan, pick up the phone and talk to the creditor and work out a better deal.
These are simple solutions for taking care of a complex problem. Sitting around waiting for the government to make all the decisions for you will not help you. We may never get a new law that wipes away all of our student debt regardless of what presidential candidates say. Take a look at the options you have and go from there.
