Overpayments: When Social Security Pays You Too Much
How to Protect Yourself From One of This Country's Biggest Creditors
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
If you've wondered why Social Security has been sending you too much money - and if you've decided to keep your mouth shut because you like the extra cash ... you may be in for a rude awakening. Here's why: The Social Security Administration (SSA) audits all of its accounts. And when they discover that they paid you too much, it's called an overpayment. You are now in debt to the SSA.
The number of people receiving money from SSA is well over 57,000,000. In fact, it's almost 58,000,000. And in 2013, SSA will pay benefits totaling more than $816,000,000,000. That's 816 billion dollars, with a b.
So, is it possible that SSA paid some people too much? Possible? Mistakes happen every day. And when SSA discovers these errors, they become one of your creditors. That's when you'll receive a letter asking - no, demanding - that you return the money now.
So while you have enjoyed the extra money, and have probably spent it, now you must pay it back.
What causes overpayments?
Most of them occur because the recipients are no longer eligible for benefits, yet they continue to receive checks. People who lose their eligibility are usually workers whose health improves and they return to work.
Under Social Security's "trial work program", some people who are on disability start to work part time when their condition improves. But determining when you need continued benefits - and when you are fully able to work - is not always easy.
In most cases, people don't realize that they're being paid too much. And as long as they continue to receive benefits, they assume they still qualify even when they don't.
Most recipients are shocked when they get the letter demanding that the money be repaid. And, sadly, this often amounts to many thousands of dollars!
So while SSA says you must repay the money, you have another option: As long as you have not committed fraud - such as if you continue to cash checks of someone who has died - you can erase the amount of SSA's overpayments in bankruptcy. This is because SSA's overpayments are unsecured, similar to credit card debts and medical bills. So if you don't have the money to repay your debt, bankruptcy will erase it.
But it doesn't always end there because SSA can file a complaint with the bankruptcy court and object to discharging the debt if they believe you took money under false pretenses. And if the court agrees, then you must repay the money to SSA. Fraud, however, is very hard for SSA to prove and the chances that it will object to discharging the overpayment are slim.
Even so, if you receive a letter from SSA demanding repayment, or if you have questions about your benefits, it's always best to check with an experienced bankruptcy lawyer who can outline your options and help you decide what to do.
Richard Fonfrias of the Fonfrias Law Group provides this information as a public service to assist people in financial distress and learn more about how Illinois law may affect them. A Chicago bankruptcy lawyer and financial rescue expert dedicated to assisting people with serious money problems, Rich has helped thousands of clients through bankruptcy. Richard Fonfrias has many years of experienced and is an expert in bankruptcy repair, bankruptcy avoidance, foreclosure avoidance, loan modification services, mortgage repair, credit repair, tax reduction and tax lien services. One of Chicago's leading bankruptcy lawyers, Rich Fonfrias can help you make a fresh start, through proven successful legal strategies that will solve your debt and credit problems and improve your financial future.