My husband and I filed out tax return on 1/31/2011. We were in desperate need of money in order to pay our bills and take care of our two year old son, so we applied for the Refund Anticipation Loan (RAL). We were approved and we received a check for $1500.00 the following day. The IRS "Where's My Refund" site said that our refund was deposited on 02/11/2011. However, the bank that issued the RAL has not received the money. Come to find out, our entire tax refund was offset due to a defaulted student loan that my husband had. We never received any notice of the offset, and even now that they have taken our money, we still have not received any notice of the offset I have filed an Injured Spouse form to try to reclaim some of the refund, but I am really worried about what will happen with the bank. We do not have the money to pay the total amount owed to them all at one time. We will owe them $2104.00. I am not sure how we were approved for the loan if there was an offset. Is there anything I can do??? Thanks in advance for any advice!
1 Answer from Attorneys
The bank would not have been aware of the possibility of an intercept of the refund due to the unpaid student loan claim which is why it was approved. Beyond waiting to see whether you can claim any part of the offset from your alleged status as an Injured Spouse, unfortunately, you would appear to be without a remedy.
And, yes, you will have to repay the loan to the bank so you might want to contact them to see whether additional (more lenient) terms can be negotiated.