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JB Umphrey
JB Umphrey, Attorney
Category: Legal
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Experience:  Explains legal matters based on 14+ years experience.
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Can debt collectors take funds from tax returns without notifying

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Can debt collectors take funds from tax returns without notifying the consumer first?
Welcome and thank you for your question!

It would be helpful to know: has the consumer already been sued for an unpaid debt and has a court judgment been issued?
Customer: replied 4 years ago.

No I have never been sued for collection of this debt, have never recieved any paper work for court judgment. The debt went into collections, never any further. It was for an unpaid student loan.

Customer: replied 4 years ago.
Relist: Other.
I would like an answer now.
Thank you for the follow-up and for providing the additional context.

U.S. Department of Treasury can seize—or garnish—your federal and potentially your state tax refunds to repay your debt. This is allowed by the Treasury Offset Program (TOP).

TOP allows the government to garnish money for repayment of your federal student loan debt. If you are a Federal Family Education Loan Program (FFELP) borrower, your tax refund may be offset by the U.S. Department of Education (ED) on behalf of your guarantor. Different kinds of government funds can be garnished. These may include, but are not limited to:

Federal travel reimbursements.

Payments from other government agencies (such as Social Security).

Federal tax refunds.

State tax refunds.

Funds can be taken without your permission. However, you will receive information regarding the amount and date of your offset.

If the loan is a private loan, the collection agency will have to first sue you for the unpaid debt, get a judgment, and then the tax refund can be intercepted.

My goal is to provide you with excellent service – if you feel you have gotten anything less, please reply back. I am happy to address follow-up questions. Thank you for your business!

~~ J.B.
Customer: replied 4 years ago.

I knew that but what I was asking was...does the collector have to notify me BEFORE taking the funds that they are going to take funds if they are not already paid?

Not if there's not a court judgment in place. You will be notified about the offset after the fact.

If there's a court judgment in place, you'll be notified about the garnishment before it occurs.

~~ J.B.
Customer: replied 4 years ago.

Ok. The original creditor of this student loan sent me a letter last year in May stating that the debt was paid in full...about 6 months later their collection agency sent me a bill saying I still owed for that. Not sure what to do about that...if I can do anything at all.

If they say that money is now owed, you mail back a letter disputing the debt, enclose the letter showing the payoff, and ask for a verification of the debt.

Keep a copy of the letter that you mail to them.

~~ J.B.
Customer: replied 4 years ago.

Great information. I will do that. Hopefully it's not too late. Thank you for your time and advice.

You are most welcome. Please do not forget to click on excellent service feedback so that we are credited for assisting you.

~~ J.B.
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