Can the government take a home from me if I owe federal student loans that are under an income based repayment plan?

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Can the government take a home from me if I owe federal student loans that are under an income based repayment plan?

I have a toddler and would love to become a homeowner.

Asked on February 20, 2018 under Bankruptcy Law, Florida

Answers:

Eric Olsen / HELPS Nonprofit Law Firm

Answered 3 years ago | Contributor

The simple answer is no.  There is no income tax from an inheritance.  It is not the practice of student loans to file lawsuits, only garnish 15% of wagers or social security.  Garnishment of ss can almost be stopped for lower income persons.  Your inheritance  will not affect your qualifications for income contingent repayment for a zero dollar payment 

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

Answered 3 years ago | Contributor

So gifts and inheritance are not typically considered "income" but it all depends on how the IRS will view the sale and the resultant money.  If you are selling then immediately buying that can also influence the outcome tax wise.  The government will not "take" your home but your income may be adjusted for the year that this all happens.  An accountant is best to tell you how this will all work and a consultation with one will be invaluable to you in planning this all.  Also, understand that your income could be readjusted for this one year and then adjusted again the following year. The one time influx of money does not throw you out of the program.  Good luck.


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