Get Out of Debt Guy

We Are Getting Ready to File Our Taxes But Owe Student Loans

Posted April 18, 2014

WRAL Reader Question

Dear Steve,

My husband and I recently married and are preparing to file our 2013 taxes. We have a son, and until now I have filed as Head of Household. Now that we are married I plan on filing as Married Filing Jointly.

My husband however, has student loans that have gone into default, and are in collections. Is our refund subject to garnishment even though the debt has been transferred to a third party collection agency? Is there any way to prevent this from happening?

Sincerely & with thanks,

Married Marion

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Dear Married Marion,

Hopefully these loans are government backed loans. If they are then it might be better to file married but separate. This will help him to qualify for government student loan assistance programs like the Income Based Repayment program on his income alone.

The downside to this is you may pay slightly higher overall taxes. Talk the tax bit over with your qualified tax preparer.

Enrolling in a repayment program offered by the Department of Education will prevent a tax intercept. The other only way to prevent an intercept is to not get a refund. In that case adjust your withholdings to stop getting big refunds to intercept.

If they are private student loans he owes, then read this, and understand private loans can't intercept tax refunds.


Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.