Can Social Security Overpayments Be Wiped out In Bankruptcy?
We all make mistakes, even the people that work for the Social Security Administration. We have had quite a few clients whose only source of income is the monthly social security benefits that they receive. Some of them have been relying on getting their monthly payments for years, and then all of a sudden, they are shocked, because totally out of the blue, they get a letter from the Social Security Administration telling them that they have been getting more money than they should legally be getting.
In other words, for many years the Social Security Administration has been giving them too much money every month. That's right,
someone who has been work working for the Social Security Administration made a mistake several years ago, and now the Social Security Administration wants the person to pay back a lot of money, like maybe $5000 or maybe even $10,000 or even more than that.
Well, our clients usually don't have that kind of money. So the Social Security Administration says OK, we'll take the money back a little bit at a time. We'll reduce your benefits by $200 or $300 a month, and we'll get our money back that way. But the problem is that this $200 or $300 a month could mean life or death to our clients. Every dollar counts to these people, and they won't be able to make it unless they get the full amount of their benefits every month.
The good news is that all hope is not lost for these clients because they can file a Chapter 7 bankruptcy, and in about 4 months the debt owing to the Social Security Administration will be totally wiped out. In addition to that, all of their other legally dischargeable debts will also be wiped out. As long as the mistake was made by Social Security, and there was no fraud or deceit by our clients, these debts will be wiped out when the Bankruptcy Court grants our clients a discharge. And as soon as the Chapter 7 case is filed, Social Security will be prohibited from taking any deductions from our clients' checks.
Under the bankruptcy laws, Social Security overpayments are treated as unsecured debts, just like credit card debt, medical bills, and personal loans. Therefore, if you can't pay back your Social Security overpayment, you can wipe it out completely by filing Chapter 7.
The one exception would be if the Social Security Administration can prove that somehow you got the overpayment by committing fraud.
For example, if Social Security can prove that you somehow deceived them, and you knew that you were not supposed to be getting
these overpayments, they could object to your bankruptcy and claim that the debt should not be discharged. But the reality is that they rarely try to do something like that because it would probably be extremely difficult for them to prove that you knew that you should not have been receiving these extra payments.
So, if you happen to ever get a letter from the Social Security Administration claiming that you owe them money that you don't have, it would be smart to talk to a bankruptcy attorney that knows their stuff, and you might be able to get Social Security off your back pretty quickly.
You can always call Seymour to get a totally free in depth case evaluation.
Seymour is your Underdog Advocate and loves to help honest people against the big corporations, the big banks, the big mortgage companies. and the big government.