Social Security Overpayments and Bankruptcy

Q: I have a notice from Social Security that I owe them money for overpayments. My husband died recently after a lengthy illness, and I am planning to file for bankruptcy because of the medical bills and other expenses incurred by his illness. I don’t have the money to repay, and am terrified of what could happen. I can’t think of anything that would have changed my status, or his. What can I do?


A: I am very sorry for your loss and for your difficulties. Generally, when the SSA sends a notice of an overpayment, it’s because there has been some change in status reported – erroneous though that change may be. It’s possible that someone may have obtained your Social Security number and is using it fraudulently. If it turns out that your number is being used by someone else in a case of identity theft, you are off the hook for the payments.

However, if you have not been the victim of identity theft, the clock is ticking. You have 30 days to ask for reconsideration and dispute the finding of overpayment. Even in the even that they do not reconsider, you can appeal for an administrative hearing before a judge. If you do not respond or SSA refuses to reconsider, your benefits will be attached 30 days after the finding. You can also apply for a waiver if you can’t afford to repay the amount. You must prove that you are without fault, and that you would be harmed or unable to pay basic expenses such as rent or your mortgage, buy food or medicine, or pay for utilities and other daily needs.

Now, as to being able to discharge Social Security overpayments in bankruptcy? Yes, it is possible to discharge this debt in bankruptcy. Just as with all other legitimate debts, this is subject to the automatic stay. And as with all other debts in bankruptcy court, it is subject to dispute by the creditor – though this is rare in cases when there is no fraud involved in the overpayment. If the recovery is already underway, SSA procedure is to refund recovered monies that were taken in the same month as the petition was filed. However, a recent decision in Georgia of Rodriguez v. United States – Case No. 09-93431-JB – Judge Joyce Bihary ruled that the SSA’s failures to follow its own procedure in processing a debtor’s waiver request paperwork had bearing on the discharge status of the debt.

I’d like to get a better handle on this, and give you more advice than I can via this medium. If you’d gather your paperwork and come to the office for a consultation free of charge, I think I can help you with getting your dealings with the SSA in order, help you with your bankruptcy, and then try to tame those medical bills. I’m sorry for your loss, and you shouldn’t be struggling with this alone. Please, get in touch with either of our offices.

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Published by
Chad Van Horn

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