Debt can make a person feel trapped and scared, especially if owed to the federal government.
Any debt owed to the government or a federal agency is considered federal debt. If debt is not owed to the Internal Revenue Service, it is called non-tax federal debt. Non-tax debt includes student loans, fines or fees owed to the government, overpayments and non-payment of government-funded mortgages. Most agencies are willing to work with individuals who owe money, and there is no need to let the debt get to the point of judgments or write-offs.
Student Loans
If a student has taken out loans for college that are partly subsidized by the federal government, this is officially considered non-tax debt. With approximately 50 percent of college graduates owing an average of $10,000 or more in debt, student debt is one of the most common types of non-tax debt. Many students consolidate their loans with large student loan consolidation companies to get lower interest rates, have one monthly payment and get assistance in keeping loans current. If student loan payments are not made on time, the loan may enter the default status. A defaulted student loan may result in collections efforts, wage garnishment, treasury offset programs and negative information placed on credit reports.
Overpayments
Overpayments of food stamp benefits may result in a non-tax federal debt. Food stamp overpayments may be the result of fraud, an error on the agency's part or an inadvertent error by the food stamp recipient. Repayments must be repaid out of current benefits or in monthly installments. People may still be eligible for benefits, even if they still owe money to the food stamp agency.
USDA Loans
A U.S. Department of Agriculture Rural Development loan, or 502 Guaranteed Housing Loan. is 100 percent underwritten by the USDA. This means if a house is foreclosed upon, the federal government has the the right to collect upon this debt. The lender may sell the foreclosed home and usd the sale proceeds to pay on the loan amount. If the home is not fully paid off, the deficiency balance can still be collected upon. State laws vary, with some states forbidden to collect upon 502 loan balances, whereas other states may use any collection means necessary to get the money.
Fines and Fees
Fines and fees owed to the federal government can be in the form of bounced checks to a government agency, overpayments from the military, loans fees, fines assessed by a government agency and any other money or property owed to a the government. Individuals or businesses may make payment arrangements with the agencies to which they owe money, or the fines are likely to go to a collection agency.
Tags: federal government, federal debt, food stamp, owed government, student loan