I havent filed my taxes in 2 years because my school loan is in default. This year I figure I need to get some stuff together (mainly my credit) so I called the CA thats holding my SL. I set up payments with them and all is ok. I have yet to make the first payment but it will be made on 1/20/08. I asked the CA will this stop them from taking my income taxes and the response was, I should get an extension from the IRS and wait the full 9 months and then file my taxes. A friend of mine told me she made 1 payment on her defaulted loan, waited a month, and filed her taxes and everything was fine. I realy dont want to lose my taxes, so can you please provide some advice on how I should proceed?

Thanks.

Most quarantors do not remove names once they have submitted them to the IRS. Your friend either had different timing or was with one of the few that will remove you for a payment. If the CA has told you not to file, then do not file. If you want to taxes back quicker then you will have to give up the benefit of rehab and consolidate your loan.

Just my experience: but I was on the tax refund offset list, I started rehab on my defaulted student loan May 2007, my name was removed from the offset list Nov 15, 2007 (just after I made my 7th rehab payment). I filed both my 2005 and 2006 tax returns last month and neither return was denied as being filed too late. I received small refunds for both years with no problems due to filing so late.

http://creditboards.com/forums/index.php?showtopic=279362

You met the conditions for getting your taxes back. The OP however has missed the deadline for getting into repayment for getting his 2007 taxes back. The lists are sent to the IRS at the beginning of December every year. You were already in repayment so your name was removed.

Maybe I am missing something but wouldn't the held taxes be used to pay on the education loan?
Isn't that a good thing?

Why not just adjust your withholdings now so you get no taxes back so you can file next year?

saladdin

From what I have been told, if I let them take my taxes it will go towards interest only and not the principal so there is no benefit for me to do this.

LynnInMN....
how would I consolidate the loan when its already in default?

From what I have been told, if I let them take my taxes it will go towards interest only and not the principal so there is no benefit for me to do this.

You owe the interest, right? So how is not paying it benefiting you? By not paying anything you are just being charged more and more interest.

It just seems you are trying to not pay what you owe.


saladdin

I do not understand your logic about taxes going towards your past due interest and not principal. Your taxes are taken....they are applied first to past due interest then principal. Keep in mind that on a regular basis your past due balance is being capitalized INTO your principal! So it would make total sense to pay that past due off! Your balance is going down....

You can consolidate your defaults quite easily provided your wages are not being garnished.

In response to the tax questions...this is the response I was told directly by the CA....and they advised that I not file until the loan is out of default so I can actually get the my taxes back. To be honest, the last two years I havent made very much money so I dont think it would make a difference to have maybe $2-$300 applied.

Would I contact the CA and ask them about consolidating? The only thing they offered me was a settlement or rehab.

I am concerned about this issue, LynninMN do you know who to contact to find out if my tax refund will be garnished?

Here's a link to an older post with that information:
http://creditboards.com/forums/index.php?showtopic=279362

Unnecessarily mean, friend.

Without knowing OP's specific circumstances, I think it is wrong for us to speculate on his/her intent to pay.

Last year, I went through the same scenario. I was being garnished, but waited to rehab before filing. Why? My refund was relatively large (by my standards) and would cover the closing costs on our home. So, for me, waiting was a strategic decision. Could be the same for OP; we don't know.

Oh, my God, you have NO idea how relieved I am to hear this! THANK YOU!!!

Call the number to make sure.