In my law practice, I handle both Social Security disability cases and consumer bankruptcy matters. As such, I regularly get calls from other attorneys and potential clients about issues where these two practice areas overlap.
One of the most common questions I get has to do with the question of whether a Social Security disability overpayment may be discharged in a bankruptcy. Overpayments occur when disability claimants continue to receive benefits even when they have returned to work or are otherwise not eligible for payment.
Often, the person receiving the payment does not know that he/she is not eligible. Social Security has a number of programs designed to encourage disabled claimants to return to work, and most of these programs provide for several months of continuing disability payments while a claimant tries to return to work.
To call Social Security’s return to work programs confusing would be an understatement. For example a disabled person can attempt to work during a “trial work period” of up to 9 months during which time he will continue to receive his full disability benefit. A trial work month is one in which you earn more than a designated amount (in 2009, this amount was $700, in 2010 and 2011, it is $720). If you work 9 or less trial work periods in any 5 year period, your ongoing benefits are not at risk. If you exceed 9 trial work months, then you may be cut off.
Sometimes, a disabled person may exceed his/her trial work months and not realize it. In other instances a person may return to work but continue to receive direct deposit from Social Security, but not realize that these disability payments are incorrect. Other people know that they should not be receiving benefits when they return to work but they need the money.
In any case, there is nothing in either the bankruptcy law or the Social Security law that prevents a Social Security disability overpayment from being discharged. The Bankruptcy Code does allow creditors (i.e. the Social Security Administration) to object to the discharge of a debt if there was fraud or “false pretenses” – so a claimant who knowingly accepts disability payments improperly could still face a challenge, although I have never personally seen SSA object to discharge of a debt in a claimant’s bankruptcy.
This dischargeability issue came up in a recent case decided in the Northern District of Georgia in which the judge denied the debtor’s request to have the merits of the overpayment dispute heard in bankruptcy court. Perhaps in an effort to forestall further litigation, the judge noted in dicta (observation) that Social Security overpayment debt is dischargeable absent some affirmative step by SSA to prove fraud.
The judge roundly criticized Social Security for failing to follow its own administrative procedures in considering the claimant/debtor’s attempt to secure a waiver of overpayment. I wonder if SSA’s tendency to ignore its own administrative rules would benefit the debtor in a dischargeability action that SSA might raise in some future case.
This question arises more often then people may think because it happens. The amount sought as overpayment can be substantial, and much more than people have to repay. This leads to problems, and the question raised by this post. Very helpful, thank you.
I have a case that is being sent to the appeals council in hopes of getting another hearing from the judge overlooking many things.
I am wondering if there is something I can do to prevent my case from being put on the internet? I see any name can be put in vs. Astrue & it is shown to anyone & everyone. I do not want this personal information on there, what can I do? Mine isn’t being shown yet, but I don’t want it ever to show.
Janelle
Is there a writen opinion in the case?
Is the SSA still asserting an administrative claim and withholding future benefits?
@Bill Clark: Yes, there is a published opinion. It is the Rodriguez v. United States – 09-93431-JB, decided by Chief Judge Bihary of the Northern District of Georgia. You can find it here: http://www.ganb.uscourts.gov/judges/opn/opnjdge.php?byjdge=JB.
I have no idea whether SSA is still asserting a claim, but I would think that doing so would not sit too well with the Judge.
I had an ssi overpayment. A month and a half after I filed Bankruptcy, Social Security withheld my taxes and applied them toward my overpayment. All of my debts including the overpayment were ultimately discharged, however I still have not received a refund on the money collected. Is this legal?
I need help. I have an overpayment with social security disability from 1997. Now, I am 64 and have applied for retirement social security and they are keeping my whole check until the overpayment is completely paid. Can I file bankruptcy for this debt?
I had received disability in the late 90’s to early 2000’s. I went back to work in 99. I told SS several times that I was working, they would raise my monthly payment because I was contributing more into SS. Anyways, after about two years of telling them and they would raise the monthly check several times, they finally cut it off. In 2009, my federal income tax refund was withheld to pay for overpayment. I went to the SS office and they told me there is no record of me telling them that I was working. I tried to have the amount waived, they returned within five minutes and said your request for a waiver has been denied. I then asked if I can repay in monthly payments they agreed. I was put on $25 a month for 109 years. I send the payment in every month, but you have to watch because I think they randomly pick a month and throw it out. When you file your taxes and expect a refund, they say because you missed a payment they are taking your refund. I am behind in my mortgage and various other bills which I was going to get caught up with this years refund, yet they took it because I “missed” a payment.
25 years ago I was awarded SSDI for my views of the King James Bible. I have been receiving $1900 a month since 1984. Additionally, I have been marked by this decision and have been block from countless employment attempts. Is that legal or is it discrimination?
In the spring of 2012, I received a letter for the SS stated that I owed 60k in overpayment. My question is this, I was not granted waiver and was told to request an appeal from a judge, which I did and it was received. The appoint/hearing has not yet been determined. However, I am still receiving letters stating I need to set up arrangements to may this debt. I am even receiving calls. The representative stated the Social Security office will still try to collected the overpayment until the hearing is set. As I explained to her, if I send in a payment, I would be an omission of guilt and I feel it is not my fault. Then she became hostel and stated my wages could be garnished. Is this so? Do I need to send in a payment? I have tried to speak with SS disability lawyers and had no luck. They do not handle overpayment cases. Where do I turn, what do I do. I only have 413.00 left over at the end of each month to care for myself and my grandson.
Just like Meister stated a few comment above. I had notified SS that I was working and I continued to receive disability. (I had to move in with my elderly parents, rent my home and return to school for a vocational job because my disability was $5.12 to much to receive Medicaid and my medication cost more than what I was receiving in disability. While receiving my disability while still working. SS would sent information to be completed about my working conditions (which I completed and returned). Suddenly they stopped. About a year goes by and suddenly one December the disability returns. I continue receiving payments for about a yr. Just like Meister, my income tax refund was taking and applied to my overpayment. Will they continue to do this? Should I do like Meister and set up 25.00 a month payments-bank drafts? If I am made to repay this debt, I would lose everything I own including my 4 yr old grandson. I can not let this happen. Someone please give me some useful information about what to do or someone to contact.
Davis, you might want to request a waiver of overpayment to eliminate or reduce the amount owed. If that does not work, or if you cannot get the full amount waived then a payment plan would make sense.
See in re Beaumont. Short answer, they can recoup from on-going disability payments.
My daughter was receiving ss for a short time. I asked for appeal to not stop her payments. But we lost the battle now they want me to pay back 12,484.00. Can I get an waiver. I used all the money to take care of her all through the time I had her social security. My daughter is a minor too. Can I put this on my bankruptcy?