Defaulted Student Loan Impacts Tax Refunds

by DeLadurantey Law Office, LLC on January 21, 2015

payoutIf your federal student loans are in default and you are expecting a tax refund this year, you might be surprised to learn that the federal government has the authority to seize your refund and apply it to your debt. In fact, the government can use your refund to offset defaulted student loans without obtaining a court order.

Before the offset can occur, however, the government is required to provide you with notice. The notification will be sent to the best address it has available, which is typically the address you used in your most recently filed federal tax returns. You will be given the opportunity to object to the offset and /or prove that your student loan is not in default.

What objections may be available to you? We would need to review your individual circumstances, but below are a few of the possibilities:

  • You do not owe the amount alleged to be due
  • Your loan payments were not properly credited to your account
  • Identity theft
  • Your student loan has been discharged in a personal bankruptcy
  • Your student loan has been forgiven or cancelled
  • Your school failed to pay an owed refund

If you file a challenge, the offset may still occur, but any amounts seized by the government that exceed the sums you prove to be due will be refunded. If you agree that you owe the debt and you do not have a valid objection available, we can help you with establishing a repayment plan that will avoid future tax refunds from being offset.

For your student loan, bankruptcy, foreclosure, and debtor’s rights matters, contact DeLadurantey Law Office, LLC at (414) 377-0518. We serve the counties of Milwaukee, Waukesha, Kenosha, and Racine, including such areas as Milwaukee, Merton, Delafield City, Waukesha City, and Kenosha. Visit our web site and like us on Facebook.


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