Overwhelmed by a social security overpayment?
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Social Security benefits are something that many older Americans rely on, but they aren't the only ones getting this type of government benefit. There are also Social Security Administration (SSA) benefits for Spouses and Survivors, Social Security Disability Insurance, and Supplemental Security Income.
But if the government sends you more money than you should have gotten, that’s an overpayment and Uncle Sam will want it back. Overpayments can happen when you lose benefits or your disability eligibility ends or changes, but the money doesn’t stop. However, there’s no such thing as free money from the government. You’ll get an overpayment notice, and it establishes a debt that needs dealt with or repaid.
But what happens when you didn’t realize you got an overpayment and spent the money? The good news is that if you can’t pay back the Social Security overpayment, you can seek relief in Greensboro bankruptcy for the debt since it’s unsecured.
What to do when you get an overpayment notice
It’s never a good idea to ignore a letter from the US government, particularly when it’s a demand for money. If you’re still on benefits, the government might take the money from future payments if you ignore the notice and don't respond or work out something with the SSA.
If the overpayment notice is inaccurate, you can file a request to appeal on Form SSA-561. If you think there was no overpayment, you can request a “reconsideration,” and if you ask for it within 10 days of the date of the notice, they will continue with your payments while they investigate.
Options the SSA offers for overpayments
1 – Ask for a waiver
If you were overpaid but believe you weren’t at fault, you can request a waiver to repayment. Fill out a Form SSA-632 (request for overpayment recovery or change in repayment rate). A waiver, if granted, can forgive the total overpayment or just a portion of it.
You can also ask for a waiver or reconsideration if you’re uncertain what triggered the overpayment but don’t feel that you did anything wrong. If the SSA denies the waiver, you can appeal that outcome by asking for a reconsideration.
2 – Compromise settlement
For cases where there is no fraud associated with the overpayment, you might win a compromise settlement. The amount of the overpayment determines how high at the SSA you’ll have to go to negotiate a settlement of less than the amount owed.
You must submit a Form SSA-795 to request the settlement and will have to prove that repayment in full would cause you financial hardship. Amounts less than $5k usually get a 20% reduction but if you owe more, the compromise discount may be greater.
3 - Repayment plan
If you can’t afford to write a check and pay back the SSA in a lump sum, you should be able to negotiate a repayment plan. You might first want to try for a waiver or reduction. After that, a plan lets you pay it back over time.
For those still getting SSA payments, the SSA might take 10% (or less) of your monthly payments until you’ve repaid the overpayment. But if you can’t afford this either, there’s one last-ditch option open to you – bankruptcy.
Using bankruptcy to discharge Social Security overpayments
Because it’s unsecured debt, you should be able to discharge SSA overpayments in bankruptcy. With Chapter 7, most unsecured debts are fully dischargeable in Greensboro bankruptcy. With Chapter 13 bankruptcy, unsecured debts can be reduced by a little (or a lot) depending on your income.
The SSA might object to the bankruptcy discharge but only if they feel you cheated the system or engaged in fraud to gain the overpayment. But if it was unintentional, you should have no problem getting a discharge of a social security overpayment in bankruptcy.
To find out more about dealing with a social security overpayment in bankruptcy, contact the Law Offices of John T. Orcutt. Read reviews from satisfied clients, then call 1-888-234-4181 to schedule a Greensboro bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.