Over the years since the VA Home Loan Guarantee Program was established many veterans have used this valuable benefit to purchase homes. In some cases a veteran may have unforeseeable financial circumstances that cause them to default on their home. In these cases the Federal Government has a specific collection policy in order to take action in recouping some of the money that was lost by guaranteeing the defaulted loan.

The policy of collection of the Federal Government for VA Guaranteed Loans that have defaulted includes:

• The veteran’s information may be reported to one or many credit bureaus which ultimately results in a negative credit standing for the veteran who defaulted on the loan.
• For the amount of time that the veteran owes money to the Federal Government they may be charged penalties and interest on the money owed.
• If you are owed money by any type of federal program this money may be taken or a portion taken by the Federal Government to repay your debt.
• You may be charged additional costs to cover the expenses that the Federal Government pays in order to service your account until you have paid back the money you owe.
• The Federal Government may refer your account to a collection agency to try to recapture the money owed.
• Any Federal tax refund owed to you may be taken or a portion taken and applied to your debt.
• The Department of Justice may get a referral for your account in order to proceed with court litigation.
• If you are a Federal employee they may keep a portion of your salary to pay back your debt.
• If you are a retired Federal employee a portion of your retirement benefits may be redirected to pay back your debt.
• If your debt is written off by the Federal Government it may be reported to the Internal Revenue Service. In this case the Internal Revenue Service will consider this written off debt as your taxable income because you received the money and never had to pay it back. This means that you will be required to pay taxes on this money as if it were income.

The Federal Government may take one or all of these actions in order to recoup money owed to them. For more information on the collection policies of the Federal Government go here.