Finding yourself in debt is not a fun experience for anyone, but finding that you owe the government money and are behind in the payments can be devastating.

For those facing bad federal debt, relief may be available in many forms, but caution must be exercised when deciding which road to travel. Some of the avenues with signs pointing to bad federal debt relief may simply be a detour to additional financial anxiety.


There are two major areas that can produce federal debt for individuals, being behind in paying their income taxes and defaulting on federal student loans. Legal troubles can also add to the debt if federal fines have been added to a criminal history. However, for the vast majority of individuals bad federal debt relief is about finding ways out of owing tons of money in past due taxes and fines as well as over due education loans.

While bankruptcy is the most efficient tool for eliminating unsecured debt, new federal laws, as well as the old ones, do not allow for bad federal debt relief on money owed for taxes and defaulted school loans. There are certain circumstances in which a portion of past due taxes may be included in a petition for bankruptcy, but a lot depends on how long the debt has been owed and amount that has accumulated.

No Such Thing As A Free Education

In the recent past, many students would take out federally insured student loans for their higher education and after graduation, before they starting working would file for bankruptcy, leaving their Uncle Sam holding the bill for their education. Today, eliminating this bad federal debt relief on loans on which they have defaulted is considerably tougher.

Before a student loan is even considered for bankruptcy, the student has to prove that being required ti repay the loan would place them in a serious financial hardship. However, finding bad federal debt relief for student loans is often made tougher through bankruptcy, with the government arguing that with all other financial obligations removed through the court, the hardship of paying back the loans is reduced.

Similar to bad loans in the private sector, when dealing with bad federal debt relief it is best to be in contact with the office to which the debt is owed and try to make arrangements to minimize the affects of the potential collection process. In most cases, explaining how you arrived in the current position and what you are doing to recover is usually enough to find at least temporary bad federal debt relief.

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