Social Security Disability Overpayments: Social Security Wants the Money Back But You May Have an Ace in the Hole

Social Security Disability Overpayments: Social Security Wants the Money Back But You May Have an Ace in the Hole

Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC


If Social Security pays you too much in benefits, it wants you to pay the money back. But sometimes the overpayments go on for years. And when you see the amount you owe – when you get that “Notice of Overpayment” – you may feel as if there’s no way!

The Notice of Overpayment will explain how this happened. Plus it will lay out your repayment options and your legal rights. These include your right to appeal and your right to seek a waiver. Social Security might grant the waiver if you can prove that the overpayment (1) was not your fault, and (2) that repaying the money would create a financial hardship.

If you do nothing – if you lose your appeal – or if Social Security denies your waiver, here’s what you could face:

1. If you are owed a federal tax refund, Social Security could seize it.
2. If you’re working, they could take money out of your paycheck before you get it.
3. If you continue to receive benefits, they could seize those funds.
4. They could send a notice of nonpayment to the credit reporting agencies.

Fortunately, in most cases, you have an out.

Many people who receive benefits are behind in their bills, especially if they have been unable to work. And this is when filing bankruptcy can help. Not only can you erase your other bills, but you can also discharge your debt to Social Security in bankruptcy as long as you did not commit fraud.

But if Social Security can prove that you knew you were not entitled to the money and cashed the checks anyway, then the agency will probably object to the court eliminating the debt in bankruptcy.

For example, if you cashed Social Security checks for someone who has died, or if you stole and used someone else’s Social Security number, then the bankruptcy judge probably won’ t let you off the hook. You’ll still owe the money to Social Security, even after your bankruptcy.

However, most of the time Social Security is not successful in its objections, if the person who received the money did so without committing fraud.

If you are on Social Security and have received a Notice of Overpayment demanding repayment of benefits, contact a qualified attorney to discuss your options, as each case is different. If you looking for an Illinois lawyer who can assist you with Social Security Overpayments and help you keep your money, Rich Fonfrias is a trusted Chicago bankruptcy lawyer who specializes in helping his clients solve their financial problems.