This is probably going to be exceptionally long, so please thank you in advance if you get through it, and I will start in the beginning…
August 2010, I received Veteran’s Affairs(VA) Education benefits from my prior military service. I collected $3000 from the months I was in school. I also got a $1500 federal loan to help finish paying for school.
October 2010, my 1 year old daughter was hospitalized for an emergent life threatening situation and was hospitalized for over 30 days, and had an emergency surgery which left her in a medically induced coma for 2 weeks. Despite explaining this to my professors and them all agreeing to fail me(in which case I could keep the funds but declare academic bankruptcy due to the situation) they all reported me as dropping out. During this same time, I gave birth to another baby.
December 2010, our 3 month old daughter passed away from SIDS on christmas eve.
January 2011, our landlord had his property foreclosed on and we were forced to move. I filled out the proper change of address forms, changed our driver’s license etc.
Current… I have had to quit my job to care for my ‘disabled’ daughter. My husband continues to work making approx $32k/yr and support a family of 6. Currently we do not receive any sort of assistance(food stamps, SSI for our daughter etc). I was taken by surprise when our personal account was levied and all the money withheld due to a debt to the state(I received a supposed grant from the state for education during 2010) They stated that since I didn’t finish that semester, I must pay back the grant(so a grant with conditions?). I made an arrangement with them and they released my funds after seeing the constant medical bills we pay for our daughter(basically they did a quick financial audit and I faxed over our finances). They released our funds and the lady kindly informed me that she was ‘sure’ that the Department of Treasury had an outstanding balance against me for the VA benefits and loan.
We are trying to pay off our debts as quickly as possible, of course it is piling up due to my daughter’s monthly medical bills(and she will need another surgery in March).
Is there any way to get this debt "forgiven" before our taxes are filed? We had planned on using the taxes to pay for her surgery, but if it is going to be withheld/offset we won’t have the funds to do the surgery etc.
A friend suggested that I not file with my husband and we will still receive a decent tax refund, and be able to afford the surgery. Is this possible for me not to file a return considering I did not have a job?
Any suggestions for getting this debt settled due to the extreme circumstances involved?
We are try
I did speak with the VA office(Debt Management Office). They stated that they could not "pull back" a debt with the Department of Treasury unless I re-entered college for this current semester(which isn’t possible with my daughter’s health problems) Is this correct or was it just a BS response so they wouldn’t have to deal with me?
My condolences on your loss.
You need to contact the VA directly regarding any existing debt with them. There may or may not be any. If there is, they may be able to either waive collection on it (they do have that authority, I’d done it before) or they may be able to put collections on hold so that your tax refund is not offset.
Your friend’s advice is only going to make things worse. You lose many tax benefits when filing separate returns, such as the EIC and Child Care Credit. Any refund will be MUCH smaller on separate returns.
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