If you are still paying off your student loans, and fail to pay them at the correct time, then you may be heading towards a default. A default is when an individual remains delinquent on payments for nine months. A borrower may be responsible for collection fees or for commission charged by a debt collection agency after going into default.

The Department of Education has the right to take certain measures to collect a default student loan. First of all, the Department of Education has the right to take your tax refund away from you. Annually, the IRS receives a report from the Department of Education with a list of student loans that are in default. Before the tax offset is removed from the borrower's refund, the borrower will receive a notification from the Department tor the loan agency with the option of paying the debt before it is garnished.

Debtors also have the right to appeal the offset if they feel that the amount is not correct or are not in debt and want to challenge this. Unless a borrower responds quickly with the desire to make an appeal, the IRS will automatically take a borrower's federal or state tax refund and apply it towards a loan repayment.

If you don't want to lose your tax refund, then you may want to get an attorney on your side to help you with your case. A bankruptcy or debt defense lawyer can assist you in arguing an applicable defense to help and preserve your tax refund. You may be able to argue that the loan has been repair, or that the loan is already being paid under negotiated repayment plan, such as one that you came up with in connection with a Chapter 13 bankruptcy. Also, you may be able to argue that the loan has been cancelled, deferred or is in forbearance at present.

In some cases, an attorney can attend the court hearing and explain that the borrower is deceased or has a severe mental or physical disability that makes it impossible for him or her to pay the bill. Also, there may be cases where the loan doesn't belong to you, even though you are a borrower. Sometimes there will be mix-ups, and someone with the same name as you may be the true debtor of the bill. If you are in this situation, then you will certainly want to work to straighten things out promptly before you are targeted for another person's financial foolishness.

Also, if the debt is fraudulent, then you can argue this as well. A debt may be unenforceable because of fraud, such as a forged signature on the documents. As well, if the student who is being targeted is supposed to receive a refund from the school, then he or she can argue to this end as well. If the borrower's school closed, then the wages cannot be garnished, or if the borrower was falsely certified for loan eligibility in the first place.

Also, if the borrower has filed for bankruptcy and the case is still pending, or a bankruptcy discharged the loan, then he or she will not have to relinquish tax refunds to pay the debt. In many situations, bankruptcies cannot discharge student debt. However, during bankruptcy all creditors are not allowed to garnish a person's wages or continue to seek collections from those who owe money. Borrowers must issue an objection to the offset to take money from their tax refund within 65 days from the day that they receive the notice from the Department of Education. Learn more about how to handle your student loan debts on the blog today!