Social Security Overpayment

If the Social Security Administration, also known as the SSA, accidentally pays you more in disability or retirement benefits than you are legally entitled to, the SSA can later come after you to collect the Social Security overpayment.

The Social Security overpayment is basically a debt that you are legally required to pay back, but like most debts, as long as you have not committed any fraud, you are allowed to discharge the Social Security overpayment in bankruptcy.

What is a Social Security overpayment?

The Social Security Administration, or SSA, needs to process a very large number of payments ranging from retirement benefits to disability benefits. Mistakes and overpayments are fairly common, since Social security laws are so complex and there is such a large volume of payments issued. Most Social Security overpayments happen, because individuals lose their eligibility for disability or other benefits when they are well enough to return to work, but they continue to receive checks from the Social Security Administration.

In most of these cases, these individuals are not aware that they are receiving Social Security overpayments. Most individuals notify the Social Security Administration when they go through a change that impacts their benefits, like returning to work, but if the payments continue, they believe that they are still eligible to receive the Social Security benefits. That’s why many people are unprepared when they receive a letter from the Social Security Administration demanding repayment of the Social Security overpayments, since the amount can often be substantial.

Social Security overpayments can be discharged in bankruptcy

Even if you owe a debt to the federal government, you can often discharge this debt in bankruptcy. There are specific debts, like criminal fines or recent unpaid taxes, that are not dischargeable in bankruptcy, but a Social Security overpayment can be discharged.

When it comes to bankruptcy, Social Security overpayments are treated in a similar way to unsecured debts like medical bills and credit cafrd debt. If you are simply unable to pay back your overpayment, you can file for bankruptcy relief to discharge your responsibility to the Social Security Administration. But you should keep in mind that the Social Security Administration is legally allowed to object to your discharge if they believe that you committed fraud by accepting the overpayments.

The SSA can object to your discharge if you commit fraud

You are not allowed to discharge debts in bankruptcy that were acquired under false pretenses or by fraudulent means. If a collector or creditor thinks that you may have committed fraud, like giving false info on a credit card application, when you received the debt, then the creditor can file a complaint, known as an adversary proceeding, to have your debt declared non-dischargeable in bankruptcy.

Similar to other creditors, the Social Security Administration is allowed to object to your discharge, but keep in mind that fraud is usually very difficult to prove in bankruptcy cases. The Social Security Administration will likely not object to your discharge for this very reason, but if they believe that you accepted Social Security overpayments knowing that you were not actually entitled to those overpayments, then they have more reason to file an objection to your discharge.

Other debt solutions related to Social Security overpayment

Aside from bankruptcy, there are other debt solutions related to Social Security overpayment. Here are a few of your debt payment options:

  • Withhold your future Social Security benefits. If you are still receiving Social Security benefits, then the Social Security Administration will withhold the full amount of your benefit each and every month as a debt repayment option, unless you ask for a lower withholding amount and they approve your request. This full withholding typically begins 30 days after the Social Security Administration notifies the individual of the overpayment.
  • Withhold Supplemental Security Income or SSI. If you are receiving any Supplemental Security Income, also known as SSI, the Social Security Administration will withhold 10 percent of the maximum federal benefit rate each and every month. If you are unable to afford this withholding amount, then you are allowed to ask them to take less from your benefit every month. You can also ask them to withhold more of your benefit, so that you can pay back the overpayment at a rate greater than 10 percent. They usually don’t begin deducting the money from your Supplemental Security Income payments until at least two months after notifying you of the Social Security overpayment.
  • Pay directly. If you are no longer receiving any benefits, you can pay back the Social Security Administration directly by bank account, debit card, or credit card on their website. You can also send the Social Security Administration a check for the entire cost of the overpayment within 30 days of notification.
  • Set up a payment plan. If you are unable to pay back the Social Security overpayment immediately by check or online, then you can contact the Social Security Administration to set up a plan to pay back the whole amount in monthly installments.
  • Withhold overpayment amount from federal income tax refund or wages. The Social Security Administration also has the option of recovering the overpayment amount from either your federal tax refund or your wages if you are working. They can also recover overpayments from future Social Security or Supplemental Security Income benefits. The Social Security Administration can also report the delinquency to credit bureaus.

Appeal and waiver rights

Keep in mind that if you don’t agree that you have received a Social Security overpayment or if you believe that the amount quoted is incorrect, you can appeal by filing a form online or calling the Social Security Administration to get the form. Your appeal needs to be in writing, and you need to explain why you think the amount is incorrect or why you think you haven’t been overpaid. You typically have about two months from the date you received notification of the overpayment to file an appeal.

We recommend speaking to an attorney at the Van Horn Law Group to learn more about debt solutions related to Social Security overpayment.

Let Us Help You Navigate Social Security Overpayment

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