They took my sons tax refund this year to pay towards the loan, but he is trying to get it back using a hardship. Will they try take my inheritance if he isn't paying? Can I take cash and or put the money in my husbands name to save it? What is my best strategy to not loose this money?
The matter depends on the status of your son's student loans. Are they private or are they federal?
It would be best to help him understand the repayment and default process. I've added links, see below.
If they are federal, then the best situation would be for him to consolidate his student loans (after obtaining a hardship deferment or a forbearance, which will give him time to learn more information). This involves combining multiple loans into one big loan.
The benefits of this process include only having to worry about one monthly payment versus many payments, as well as increased repayment options. He can also use consolidation to pull certain loans out of default status.
For example, he could combine all of his federal loans (even the defaulted ones) into one federal direct consolidation loan and repay the loan through Income-Based Repayment (IBR).
This means that his required payments will not exceed what he could easily pay with his current income. There will be a minimum amount to pay, but if he doesn't have much then the amount could very well be nominal.
If he remains in default, then this could very well damage your credit worthiness. Additionally, you may have to pay instead if he cannot, will not, or is unable to pay himself (which means that you will pay with whatever means are available). So before that happens, read on.
Federal loans can be recouped using various strategies, including intercepting tax returns.
He may also want to look into a possible administrative discharge, which include: Closed School Discharge, Death Discharge, Teacher Loan Forgiveness, and Public Service Loan Forgiveness (this last one is an excellent option). He might also qualify for the "Pay as You Earn" program.
In very rare cases, he might be able to get his loans discharged through an adversary proceeding filing while in bankruptcy (this is hard to do; the court will likely want him to try a consolidation or other administrative discharge first).
The first thing to do is to have him go to the National Student Loan Data System (NSLDS). This is a federal database website where he can log in and review vital information on his student loans, including outstanding balances, disbursements, loan statuses, and loan amounts. He will need his social security number and PIN to access his information. He will also need to go to the Federal Student Aid PIN Website. This website allows him to to apply for a student aid PIN or get a new one if he forgot his old one. A student aid PIN is required if he want to access your Federal Student Aid records online. Get a hardship deferment or forbearance, study his options, apply for IBR, and work in public service. If he gets an IBR plan, then his loans will be discharged, but he will have a tax liability for the amount that remains. However, if he works in public service (the definition includes many different things), then he will get his discharge without a tax liability (which is a huge win).
Here are links for more information. http://www.ibrinfo.org/faq.vp.html#_Who_can_use and https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven
Doing these things will help protect him and yourself from default and forced repayment options that neither of you want.
Is there a judgment against you? Is it federal guaranteed or other? See an attorney in the collections / bankruptcy area to evaluate how you should proceed. It may be possible to shelter the inheritance from any collection effort by placing it in an exempt asset or account such as homestead or retirement account.
