How to Get a Treasury Offset Program Hardship Exception

The Treasury Offset Program (TOP) is a federal program used to collect past-due debts by intercepting federal payments, like income tax refunds. Managed by the Treasury Department’s Bureau of the Fiscal Service (BFS), these funds are used to pay delinquent debts owed to federal and state agencies, such as defaulted student loans or past-due child support.

For those experiencing significant financial difficulties, the program allows for requesting a temporary suspension of the offset. This relief, known as a hardship exception, provides a pause in collection for those who can demonstrate a severe and immediate need.

Determining Eligibility for a Hardship Exception

A financial hardship is a situation where the offset of a federal payment would prevent you from affording basic living necessities. The authority to grant a hardship exception lies with the specific creditor agency to which the debt is owed, not the IRS or the BFS. The offset notice sent by the BFS will identify the agency that requested the offset, such as the Department of Education or a state child support office.

To qualify, you must demonstrate that the loss of the intercepted funds will cause immediate and severe harm. Examples of qualifying circumstances include facing an imminent eviction, a home foreclosure, or a shut-off notice for essential utilities like electricity or water. The inability to pay for urgent medical care or prescriptions for yourself or a dependent is another valid basis for a hardship claim.

The creditor agency will evaluate your complete financial picture to assess your claim. Simply wanting the money for non-essential purchases or to pay other, less urgent debts will not meet the standard for a hardship exception.

Information and Documentation to Prove Hardship

Successfully obtaining a hardship exception requires building a case supported by thorough documentation. Before contacting the creditor agency, you should gather all the necessary evidence to present a clear and verifiable picture of your income, essential expenses, and the specific harm the offset will cause.

You will need to provide a comprehensive package of information, including:

• Proof of all household income, such as recent pay stubs or award letters for Social Security, disability, or unemployment benefits.
• A detailed monthly budget supported by copies of recent bills and statements for expenses like your mortgage or rent, utilities, car loans, and insurance.
• Evidence of imminent harm, such as a formal eviction or foreclosure notice, a utility shut-off notice, or a letter from a doctor detailing necessary medical treatments and their costs.
• Recent statements for all bank accounts to show your current available funds.
• A concise letter explaining your circumstances, how the offset will prevent you from meeting basic needs, and formally requesting a temporary suspension.

How to Request an Offset Hardship Exception

Once you have gathered your financial documents, you can formally request the hardship exception. The first step is to locate the contact information for the creditor agency, which is printed on the Treasury Offset Program notice you received from the BFS.

It is best to start with a phone call to ensure you are directing your request to the correct department. When you call, state that you are requesting a financial hardship exception for a Treasury offset. The representative can then direct you to the specific office or individual responsible for handling these claims.

After identifying the correct submission channel, send your prepared package of documents. Follow the agency’s preferred method, which they should provide during your call. If mailing a physical package, use a service like certified mail that provides delivery confirmation. Some agencies may also offer a dedicated fax number or a secure online portal for uploading documents.

After You Submit Your Request

After you submit your request, the creditor agency will begin its review process. The timeline for a response can vary, sometimes taking 30 days or more. There are three potential outcomes: your request may be approved, denied, or the agency may contact you for additional information.

An approval is a temporary suspension of the offset, often for a period such as 60 or 90 days, to give you time to manage the immediate crisis. This is not a forgiveness of the debt. The underlying debt will still exist, and the agency may resume offset activities after the suspension period ends.

A denial means the agency did not find that your circumstances constituted a severe financial hardship. If your request is denied, the offset will proceed as planned. In some cases, the offset may have already been processed by the time a decision is made. If a hardship is approved after the funds have been taken, the decision to refund the money is at the discretion of the creditor agency.