Economic Stimulus Check Seized to Pay Student Loans

09 Jun Economic Stimulus Check Seized to Pay Student Loans

This twist on an economic boondoggle came to the attention of one of my part time legal assistants, who also works as a volunteer substance abuse counselor to low-income people. If you look at the fine print concerning economic stimulus checks, it does mention that they will be subject to tax refund intercepts, including those to offset delinquent student loans.

It is anyone’s guess how many stimulus checks are being diverted in this manner. The number is probably substantial. The economic stimulus value of all this money, diverted into the pockets of lenders, is highly questionable.

My assistant’s acquaintance’s sole source of support is Social Security disability income for a mental condition of at least a decade’s standing. Currently homeless, he’d planned to use his stimulus check as a payment on a dilapidated travel trailer parked behind a gas station, so he’d have a roof over his head. He might qualify for a hardship discharge of the student loan, if he could find an attorney to take on a complicated case without any possibility of payment.

Then again, he might come up against the wrong combination of court and lender, and be told his circumstances did not present the required standard of certainty of hopelessness.

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I was admitted to practice in 1978. I am certified as a Consumer Bankruptcy Specialist by the American Board of Certification. I regularly speak on tax and bankruptcy issues at state, regional and national conferences. Years of experience in practice before the Internal Revenue Service and Oregon Department of Revenue have given me the background to resolve a large variety of consumer tax issues.
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