If you are very behind on your student loan payments, the government can take your tax refund each year until it is paid back. This can be detrimental for you if you were expecting this money for an emergency, such as paying your house loan, paying a past due electric bill, or other home bills that you are behind on. Below is some information you should find helpful in getting the government to stop taking your tax refund. It may be difficult to stop this offset, but it is possible to do so.
Talk With the Loan Company
The first thing you should do is contact your student loan company and ask them to stop the offset. If you agree to set up a payment program, and make your first payment within a certain amount of time, which is usually within a few days, they may agree to stop it. This does not always work, but it is worth a try.
Sometimes they will offer to stop the offset after you make a few payments. This does not help with taxes this year, but by next year you will likely get your full refund.
If you do not know who your loan company is, visit National Student Loan Data System, who may have this information.
Consolidate Your Loans
If you have good credit, contact a bank and ask if they will consolidate your student loans. Once they are paid in full, they will contact the government to have your name taken off the list. When consolidating your loans, make sure you set up a payment plan that you really can afford. The bank should work with you in this regard.
File For Bankruptcy
In some cases, filing for bankruptcy can stop this offset. In many cases, however, a bankruptcy will wipe most of your debt you have except your student loan. There are some circumstances that will wipe out this debt, such as if repaying the debt will cause an undue hardship for you. You must be able to prove this to the court. You should hire a bankruptcy attorney such as Attorney John A McLaughlin Jr PC to help you. It is best to hire someone that has experience or specializes in this area.
If you have a spouse whose name is not on the loan, he or she can submit an injured spouse form so their part of the taxes will be given to them.