What Happens to Social Security Overpayments When You File Personal Bankruptcy?
Understanding Personal Bankruptcy and Social Security
When you file personal bankruptcy, and you are receiving social security benefits, you may have a few concerns. For instance, what happens to overpayments when you file personal bankruptcy? This is a legitimate concern and one that should be appropriately addressed, especially if you want these overpayments to be discharged along with the rest of your unsecured debt.
What Causes Social Security Overpayments and How Do They Affect You When You File Personal Bankruptcy?
Social security overpayments often occur when individuals continue to accept social security payments even after they have returned to their place of employment. When the error is discovered, those individuals are usually required to repay the overpayment.
Social security can be tough to understand, even to the most trained individual, especially when related to personal bankruptcy. It is not always the fault of the disabled that social security payments continue to be made. This administration often encourages individuals to find employment, even when they are disabled and receiving monthly checks, as long as the employment does not lead to substantial activity. So how do you know when too much is too much? How do you determine when you have crossed the line into substantial activity?
While most social security overpayments are dischargeable in bankruptcy, whether yours will be or not depends on a couple of factors. The court will look at all the evidence brought to them and determine whether you willingly took the overpayments, knowing that you were not entitled to them. Whether or not your overpayment will be discharged greatly depends on the answer to this question, and the following.
- You must show you made an effort to contact the Social Security Administration and inform them of your return to work. In the court case, Rodriguez vs. The United States of America, a man named Diego Rodriguez accepted overpayments totally about $70,000. He made countless attempts to contact the Social Security Administration and let them know he was returning to work. He even tried to set up an administrative review and was completely ignored. Because he made the effort, his overpayments were discharged when he decided to file personal bankruptcy.
- You must make an effort to try to resolve your payment issues with the Social Security Administration (SSA) before you decide to file personal bankruptcy. This shows that you were willing to make payments on the debt, but were unable to reach an agreement with the SSA.
- If the SSA disputes the discharge of your overpayments when you file personal bankruptcy, you may not be able to obtain a fresh start. The dispute has to be timely, though. If the SSA waits too long to dispute the discharge, you may be entitled to a full discharge of your overpayments.
Before you decide to accept Social Security disability payments, which could eventually cause you to file personal bankruptcy, make sure you understand all of the rules and regulations. Discuss any areas of confusion with the SSA itself and make sure you know who to contact if you decide to go back to work. If you eventually do need to file personal bankruptcy because of overpayments, retain the help of a good lawyer and make an effort to resolve your issues with the SSA before filing.
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