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I settled a debt(in process of) for certain amount with the government, but there is a note at the bottom which bothers me.

If I understand correctly, this means that I would have to pay the reduced amount, if the government reverses for any reason, correct? This sounds bizarre considering that there is a compromise made with both parties already.

"This confirms your arrangement to settle in full your account for $x amount. Please send in payment in form of check, cashier's check, or money order.

Please note the following exceptions to this compromise: If your account has been reduced by the offsets of any funds owed by the federal government, and that offset is reversed for any reason in the future, this debt will be restored to the extent of that reversal, and you will be required to pay the amount of any reduction caused by a reversal of that offset."

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  • It means (1) when the government owes you some money, it will reduce your debt by off-setting the same amount instead of paying it to you. (2) however, if the off-set is reversed, you will have to pay the original debt amount before the off-set. Imagine, you have to pay 100. The government reduces it to 80 by off-setting 20. However, for whatever reason, the off-set is cancelled and the amount goes back to 100. Then, you have to pay 100.
    – user140086
    Mar 14, 2016 at 10:10
  • I think the clause they've used there basically just covers them in the event that it turns out the offset was calculated incorrectly or later evidence shows that it shouldn't have been offset at all.
    – John Clifford
    Mar 14, 2016 at 10:17
  • guestishere, we got a queued edit request from user5977290 which appears to be you adding more information to the original question: was it you who submitted that?
    – John Clifford
    Mar 14, 2016 at 10:26
  • You pretty much always run the risk when settling a debt for less than the original amount that your creditor might screw you later down the line and say you have to pay it all, but usually there are agreements in place to stop them just doing that on a whim. They would probably have to prove there was a legitimate reason for the offset no longer applying.
    – John Clifford
    Mar 14, 2016 at 10:29
  • If you created two accounts by mistake, you can visit the link and merge them. Your government might owe you money in the future when they return your tax for example. The government might try to off-set the return .
    – user140086
    Mar 14, 2016 at 10:34

1 Answer 1

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I don't know why your debt was settled with a discount to you (and frankly it doesn't matter either, the government uses boilerplate documents for these sort of things, so their comment may not even be relevant to your case) so I am just going to imagine a scenario, which hopefully makes it the clearer to you:

Imagine the reason for your discount was that you didn't have that much money and you told the government this. If later the government were to discover that you had been lying about how much you had at the time. Maybe they discover that you had a chest of gold in your basement, effectively making you a rich man at the time. Then they might decide based on your dishonesty, that you weren't entitled to the discount. Thus making you pay the full amount (plus interest?).

Rest assured, if you have been honest and forthright in your dealings with the government, and they have not miscalculated your discount, they should have no reason, nor right to withdraw the it.

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