Can Sally Mae legally take my tax refund even thought I have signed an agreement and have been paying on time every month?

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Can Sally Mae legally take my tax refund even thought I have signed an agreement and have been paying on time every month?

I have a Sally Mae loan with Department of Education, paid through a financial systems company. About 3 months ago they told me if I didn’t start repaying that month that they would take my tax refunds. So I entered a loan rehabilitation repayment agreement I have been paying every month on time, I have proof of payment and agreement; I am also paying an extra 18.5% collection costs. Today I found out that my whole federal tax return has been applied to my Sally Mae loan. Can they legally take my tax refund even thought I have signed an agreement and been paying on time every month?

Asked on February 3, 2012 under Bankruptcy Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Here is my fear: that the compnay that services the loan did not do what they were supposed to do in time and Sallie Mae garnished the return.  If all you say s correct then they should not have taken the return but if they have it is unlikely that you will be able to get them to give it back.  So you need to make sure that it is properly credited and really keep very good notes on this matter.   In fact, write to everyone involved and ask for a complete accounting of the loan since you took it out.  Good luck. 


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