Student Loan Wage Garnishment

Is this a private or federal loan?

(I think?) either way., Private OR Federal loan, you can't file BK or anything on it. If it's in Default (Private or Federal) they can garnish your paychecks, take your refund to pay it back, etc.

How long after going from wage garnishment to voluntary repayment does it take the IRS to get notice not to hold your return for student loan purposes?

Yes your income tax can be held for nonpayment of federally secured student loans. This is known as an offset with the IRS. Your student loan is considered federal debt. Old military debts, and state debts are also considered federal debts. Your wages can be garnished for nonpayment of student loans by what is known as an administrative garnishment.

Please read <a>HERE</a> for more information.

That cannot be guarenteed it will take effect right away. I have seen some folks pay their student loans, but income tax was still withheld. Like sdcharges stated, I think once the debt has been reported to the IRS they collect untill balance is satisfied. But I am not too sure.

Maybe someone can come along and clarify that!

Each guarantor sets conditions each year as to if and how a borrower will be removed from offset. For 2008, the offset lists were submitted early December....you had to meet certain conditions ....some required a total dollar amount be paid over that calender year, others require 3 payments ....each is different. There is no set rule.

Good information Soaplady

I've known people who have Defaulted on student loans. One SPECIFIC person had a loan for $15,000.00 ( or close to that). EVERY year, at Tax time, she always got a refund. However...when the Student loan entered a 'default Mode', the IRS took her entire Refund, every year, to pay it back. She's STILL hasn't paid all of it back, yet. However...depending on whom you got the loan through, sometimes, lenders can help you bring your loan out of Default.

Tax offset is used only on defaults...you keep your loan current and out of default, seizure is a non issue. Lenders however, will not bring you out of default. You either have to rehab thru your guarantor or CA or do a consolidation. Of course this is only applicable with federal loans.

Are Rehab's possible on private student loans??

Nope....no rehabs for private loans.

Thanks! Are you familair with collection tactics for private student laons?

I wouldnt call them tactics but yes I am familiar with them .

No bankruptcy on them
Due to the default clause on the contract, the balance is due in full on demand.
Even if you are making payments, they will sue you.
Refinancing a private student loan is impossible and no rehab. These loans do not have federal protections like federal loans.
They also report like student loans....everything is based off the claim paid or default date.

I din't realize that there was that much difference between a Federal loan and a Private loan...WOW!! Sems to me, if you DO get a Student loan, probably a better idea to get a Federal one.

Yes this is very good information to know.

So I guess if you default on a private student loan, that is pretty much it. Seems most of the private loans have a ridiculous repayment plan as well

Federal are a lot easier to deal with than private loans. When I was working as a financial aid officer, I always advised students to take as little as possilbe with private loans....most were better off working an extra job.