How to Settle a Federal Non-Tax Debt

Most people instinctively think of the IRS when it comes to owing the federal government money. However, you can owe the federal government for non-tax obligations, such as government guaranteed student loans, or unpaid fees or fines levied by the federal government. The Financial Management Service, an agency of the Treasury Department, is responsible for collecting these fines and fees. If you owe non-tax debt to the federal government, you may even be able to settle the matter by paying less than the full amount owed.

Instructions

Instructions

1

Contact the Department of Education if you are seeking to settle a student loan debt by making a single payment of less than the full amount owed. Explain your situation, and ask them if the can write off a portion of the balance. Provide proof of your income and expenses to illustrate your inability to pay the full amount. Ask if you can settle the debt for less than the total outstanding balance by paying the adjusted amount in full immediately. See if they are willing to waive interest and penalties in return for prompt payment of the principal balance owed.

2

Contact the collection agency if the Department of Education has sent your account to a private service. Ask to speak to a supervisor who handles Department of Education collections. Explain your circumstances calmly and politely, and request to settle the debt with a one-time payment for less than the full balance. If they deny this request, ask for a monthly payment schedule. Ensure the payment schedule conforms to your ability to pay.

3

Contact the Financial Management Service (FMS) of the Treasury Department to settle non-tax debt to the federal government not originating from a student loan. Explain to the FMS account representative that you do not have the balance in full, and ask if you can settle the debt for less than the balance owed with a one-time payment. Request an affordable monthly payment plan, should the settlement request be denied.

4

If FMS has referred your account to an outside collection agency, contact the agency directly. Ask to speak with an FMS contract supervisor. Explain the history behind the fee or fine and the circumstances that prevented you from paying it. Try to negotiate a one-time payment settlement for less than the full balance owed. Provide documentation of your personal financial situation, if requested, to support your case that they should write off a portion of the balance in return for immediately clearing the remainder. Seek a reasonable monthly payment schedule should they insist that you pay the balance in full.