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What can happen if you default on a federal student loan?

You are “in default” on your federal student loan if you have not paid in 270 days (approximately nine months).  Your wages can be garnished or your tax refunds seized.

How do you stop seizure of your tax refunds?

student loan

Tax refund seized

You can request an offset refund, but there are limitations.  Here are a few examples:

  • You filed for bankruptcy and the case is still open, or the student loan was discharged in bankruptcy.
  • You repaid the loan.
  • The student loan is not yours – the Social Security number attached is incorrect.
  • You are in a repayment agreement with the Department of Education and have started making payments as required.
  • You are totally and permanently disabled.
  • The loan isn’t enforceable.

If you fit the bill, you’ll need to complete a student loan tax offset hardship refund form and provide proof of your hardship. You also can contact the Treasury Offset Program at 800-304-3107 for more information.

About the Author:

Diane L. DrainDiane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. As a teacher and retired law professor, Diane believes in offering everyone, not just her clients, advice about the Arizona bankruptcy and foreclosure laws. She is also a mentor to hundreds of Arizona attorneys.

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*Important Note from Diane: Everything on this web site is available for educational purposes only, is not intended to provide legal advice nor create an attorney client relationship between you, me, or the author of any article.  Any information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*