Federal student loan collection power have grown so much over time that the government rarely sues borrowers, opting instead for an array of extra-judicial collection tools.
Tax Refund Offsets
The tax refund offset program involves a blanket seizure of almost all tax refunds due to debtors who are in default on their student loans. Amounts offset may include “special” payments such as economic stimulus refunds.
Bankruptcy and Tax Offsets
Filing a personal bankruptcy petition before the offset activates the United States Bankruptcy Code automatic stay provision. The stay prohibits virtually all actions against the debtor’s property, including intercepts of owed tax refunds based on a student loan default.
Non-Judicial Wage Garnishment
Both the Higher Education Act and the Debt Collection Improvement Act authorize administrative wage garnishment. This means you can have your wages garnished without having a judgment entered against you. You can have up to 15% of your disposable pay garnished for default on a student loan. Guaranty agencies can also garnish your wages.
Seizure of Federal Benefits
You can also have your federal benefits offset. Offset is explicitly allowed against Social Security benefits for instance.
If you are in default on your student loans, please contact the Zarcone Law Firm at 619-800-3082 for a FREE consultation.
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