Can My State Tax Refund be Garnished for Student Loans?

If you are expecting a tax refund and are surprised to find out that it was taken by the federal government, it may be because your federal student loans are predetermined. The federal government’s Treasury Compensation Program raises funds from people who have defaulted on debt with federal or state agencies. This includes federal student loans and other federal debts, such as small business loans. So now we will talk about the question, ‘Can your state tax refund be garnished for student loans?’

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Repayment of income tax

Regardless of the federal program you choose many Treasury benefits can be garnished.  Through the Treasury Compensation Program including tax refunds.  Some Social Security benefits and even agricultural benefits. Federal benefits will continue to be confiscated until the defaulted loan is repaid. If you default on your federal student loans.  Which generally means they are past due 270 days or more.  The Department of Education will notify the Treasury Department of the defaulted loans.  And will therefore be subject to federal benefit compensation as repayment of the income tax.

The Treasury Department will match the tax identification number on its computer systems with that provided by the Department of Education. The tax identification number of most people is their Social Security number. When the numbers match officials mark your Treasury account as an account that must be cleared.  Until the predetermined amount provided by the Department of Education is paid or you have worked with the Department of Education to reach another resolution.  Such as paying off your loan in full restore it or refinance the outstanding balance. Before you withdraw money from your tax refund.  You will receive a notice in the mail informing you that compensation will begin in 65 days. Please note that the ad can only be sent once and you know its last address.


Can treasury compensation be appealed?

You can appeal the Treasury compensation on your tax refund by working with the holder of your loan. You have the right to conduct an administrative review of your debt.  Which can resolve disputes about the amount of your debt. As well as allow student loans to be paid or enter into a commitment agreement for less than half of your debt. ‘Pay a debt if you don’t give’ doesn’t think you can pay the full amount over time. Some of the reasons for appealing compensation are that you are eligible for a closed school discharge.  The loan is not due to forgery or some other reason your school has not returned the money.  Or you agree to refund the owner of the loan and are making payments as agreed.

For some people, you may be able to show difficulties as a result of offsetting your tax refund. If that appeal is successful your tax refund will be returned.  But you should know that the process can take up to two months and is only allowed once.


What is garnishment?

Pay increase is the process by which an authorized third party may receive part of your salary or wages directly from your employer until your debt is paid. This can happen in civil proceedings like child support disputes and consumer debt and student loans. To decorate your pay a third party generally needs to obtain a court order to start a lien.  And you will have an opportunity to demonstrate possible injury. Federal and state loan holders have the authority to issue garnishments as an administrative action, which means they do not require a court order.


What to do if your pay is garnished?

Decorating your pay means you have to be in a difficult situation because it generally takes a year or more and other administrative procedures. The Department of Education does not always use the garnishment of wages as an attempt to recover debt from defaulted student loans. However, when it does, it can raise up to 15 percent of disposable income. If your payment is being garnished to pay off a student loan debt, the debt may not be a federal loan but a private loan.

No matter who collects your salary, you have a few options. You can cancel the lien until you have paid off the loan balance, or come to a new payment agreement with the lender. You can also dispute the amount of the debt or the terms by contesting the court order. To do this, you may need legal assistance, which you can get at no cost from some legal firms.

Before you go, I hope this above article answering can your state tax refund be garnished for student loans is helpful for you. If you need help speak to a tax expert about your personal situation.


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