Recently, I have been receiving a lot of calls from folks who have been hit with an overpayment letter from Social Security and they are in a panic about what to do especially as it is almost next to impossible to retain an attorney to represent a claimant who has been assessed an overpayment. To help, here is some information that Social Security provides about overpayments and what to do.
First, an overpayment occurs when Social Security pays a disability beneficiary more than what they should have been paid. When that happens, Social Security will send an "Overpayment Notice" that is supposed to explain why somebody was overpaid, repayment options, and appeal and weaver rights.
Options for Repaying
If you agree that you were overpaid and would like to pay it pack, there are several ways to do so. If you are receiving Social Security benefits, Social Security will withhold the full amount of your benefit each month, unless you ask for a lesser withholding amount and Social Security approves of your request. Full withholding will start 30 days after Social Security notifies you of the overpayment.
If you are on SSI, Social Security will generally withhold 10% of the maximum federal benefit rate each month. If you can't afford this, you can ask Social Security to take less from your benefit each month.
Social Security won't start deducing money from your SSI payments until at least 60 days after they have notified you of the overpayment.
If you no longer receive SSI, but you receive Social Security, you can pay back your SSI overpayment by having up to 10% of your monthly Social Security benefit withheld.
If you aren't receiving benefits, and you don't pay the amount back, Social Security can recover the overpayment from your federal income tax refund or from your wages if you're working. Also, Social Security can recover overpayments from future SSI or Social Security benefits. Social Security will also report the delinquency to credit bureaus.
Appeal and Wavier Rights
If you don't agree that you've been overpaid, or believe the amount is incorrect, you can appeal the overpayment by filing form SSA-561. You can get the form online or by calling Social Security. Your appeal must be in writing and explain why you think you haven't been overpaid, or why you think the amount is incorrect.
You have 60 days from the date you received the original overpayment notice to file an appeal.
If you believe you shouldn't have to pay the money back, you can also request that Social Security waive collection. To do this, you must submit form SSA-632, which you can get online or by calling Social Security.
There is no time limit for filing a waiver as long as you can prove that:
- The overpayment wasn't your fault.
- Paying it back would cause you financial hardship or would be unfair for some other reason.
Social Security will ask for proof of your income and expenses. Also, Social Security will stop recovering the overpayment until they have made a decision or your request for an appeal or waiver.
Under certain circumstances, a Social Security overpayment may be discharged through a bankruptcy proceeding just like other types of government and private debts. In the event you are unable to resolve the overpayment issue with Social Security through either an appeal or waiver, you may want to consult with a knowledgeable bankruptcy attorney to see if a bankruptcy filing would be possible and in your best interests.