Defaulted Loans May Haunt Seniors

According to an article in the WSJ this morning by Ellen E. Schultz, Congress (that would be Democrats, btw, who won Congress in 2006 in case you've forgotten) tacked on a nasty little thing to the 2008 Farm Bill. I've read quickly through the highlights of the bill, and can't find the specific provision, so I'll take her word for it.

"A provision in the 2008 Farm Bill lifted the ten-year statute of limitations on the government's ability to withhold Social Security benefits in collecting debts other than student loans—for which the statute of limitations was lifted in 1997—and income taxes, where the limit remains 10 years.

This means that a person who defaulted on a small-business loan in 1995, for example, and who is receiving Social Security could be notified that his benefits may be reduced each month until the debt, with interest, fees, and penalties, is paid. The Treasury can withhold 15% of the benefit, though it can't be reduced to below $750. Tax debts have no floor.

The change will add more than $6 billion to the $75 billion in delinquent debt individuals owe the government, according to the Financial Management Service, the Treasury's debt collection unit. Defaulted Loans May Haunt Seniors - WSJ.com

Imagine the interest, fees and penalties the Treasury will tack onto that loan you defaulted on 15-20 years ago, and then see your Social Security check go "poof" right before your eyes! Wow. Even if you challenge the validity of the government's claim, you can spend thousands and thousands fighting the claim and still be impoverished by using up your savings. And you folks trust the government with health care? This is a change in the law--and how many people were paying attention to a farm bill? This will impoverish God knows how many seniors. But not to worry. Obama will tax the rest of us for some new program so he can claim to rescue them from the impoverishment the Democrats bestowed on them!

Also, lookout if you are defaulting on a government backed loan right now. Especially, if retirement is coming up. If they can take your social security to pay it off, they can take your government pension too.