Can my life insurance beneficiary money (my mother recently died) be garnished by the feds for defaulted student loan ?

Asked almost 4 years ago - Seattle, WA

The Federal government is now collecting on a $250,000.000 + (Original debt was $80,000) defaulted student loan by garnishing my income tax returns, any future Soc. Sec. benefits, etc. My mother recently died and left me as a beneficiary on 2 of her small life insurance policies (total I would get would be about $6,500). Can the Feds take this money in any way from me? Can they intercede with the insurance Co. on these beneficiary payments and garnish them? (I have $25 in my savings acct, and about $200 in my checking acct, own no home, own no car, and own no property and have no assets). I live in Washington State.

Attorney answers (1)

  1. Tony E Carballo

    Contributor Level 13

    Answered . Yes unless there is an exemption available for life insurance that would apply but I doubt it. You might get the money before the Feds find out but if you put it in the bank it will probably be garnished soon. Given your financial situation you might want to consult with a bankruptcy lawyer about discharging student loans in bankruptcy. It is hard but not impossible, particularly if you have any disability that reduces substantially your ability to earn a living.

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