Lots of people in New Jersey and the Gloucester County area are struggling with paying their federal student loans. Many have missed out on tax refunds because the federal government took them (called an "offset" or an "intercept"). But this doesn't have to happen!
Could It Happen To Me?
Intercepts happen when your loan is in default. This happens when payments are 270 days (9 months) past due. If you are current, great. If you are in a deferment or forbearance, also good (just make sure it is not due to expire before you file your tax return).
If you are less than 270 days behind, then try to get current. If you need more time to do it, then get under the cover of a deferment or a forbearance while you work something out with your loan servicer.
But What If I Am In Default?
If you want to protect your tax refund there is a way to do it, but it requires some advance planning. According to an agreement made between the loan guarantee agencies and the federal Department of Education, a written notice of offset must be sent to you giving you 65 days to respond.
This notice must inform you of your rights to:
- Inspect copies of the Department's records (including promissory notes)
- Enter into a voluntary repayment plan in order to avoid offset
- Request a hearing/review to dispute the debt
If you do nothing, then your account is certified for offset, and you will eventually lose any refund you may be entitled to for that tax year. Don't let this happen!
What Should I Do?
These notices are usually sent out in July and August each year. Thus you should plan to make some payments on the loans prior to that and then negotiate a payment plan to rehabilitate your loan and get out of default. After certification is issued, offset can only be avoided by:
- Paying off the balance
- Paying a compromise amount
- Rehabilitating the default
- Consolidating the loans
- Discharging the loans
If your loan has been certified for the offset, then you need to get out of default before filing your return. This may well involve getting an extension if you need more time.
A refund intercept, much like a Notice of Administrative Wage Garnishment (AWG), should serve as a wake-up call that you need to do something about your student loans.
If you live in southern New Jersey and have received an offset notice on your student loans, or you are in default and about to file your tax return for a refund, please contact my office right away at 856-432-4113.
Even better, download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it to determine if I can be of assistance and contact you to discuss representation.
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