Is a Social Security Overpayment Dischargeable in Bankruptcy?

Dischargeable---Unless Fraud Is Alleged.

social security overpayment dischargeable

Overpayments of Social Security benefits are unsecured debts just like credit cards and medical bills, and they are therefore dischargeable in Chapter 7 and Chapter 13 bankruptcy in most cases, short of any finding of fraudulence in the acceptance of the payment by the recipient. In other words, so long as you did not accept the payments knowing that you were not entitled to it---or knowing that you were about to file for bankruptcy---the overpayment amount can be discharged in a Chapter 7 or Chapter 13 bankruptcy.

Is a Social Security Overpayment Dischargeable? Just Like Any Other Unsecured Debt.

Simply because the claim for the debt is held by a governmental agency does not mean that the debt cannot be discharged. Even IRS or Michigan state or other state tax debts can be discharged in bankruptcy, under certain, very specific circumstances. Bankruptcy is itself a function of Federal law and, therefore, the mere fact that a debt originates with a Federal agency does not tell the tale. All debt claims are subject to the sweeping effects of bankruptcy, regardless of point of origination. The primary question with Social Security overpayment dischargeability is the question of fraud. Fraud is the primary ground in bankruptcy for a finding of a lack of dischargeability (i.e., the bankruptcy will not discharge the debt) for any debt and particularly so for Social Security, tax, and other debts of governmental origin. Whether or not fraud is at issue in a question of social security overpayment dischargeability is often something that will not come about until after the Chapter 7 or Chapter 13 is filed and the State of Michigan or the Social Security Administration take exception to the discharge, object, or file an "adversary proceeding" (lawsuit) to have the debt declared to be non-dischargeable. Thus, a little leg-work by an experienced Michigan bankruptcy attorney goes a long way toward ensuring the success of your case and the full dischargeability of your debts, including Social Security overpayments. You may not believe that you engaged in any fraud, but the question will be whether the governmental agencies involved are of the same opinion. The Hilla Law Firm, PLLC will, whenever possible, contact the agencies in question to discuss the overpayment prior to filing so that you have the best information possible before pushing the button on your Chapter 7 or Chapter 13 filing.

Is A Social Security Overpayment Dischargeable? The Bottom Line.

Every case must be examined thoroughly on its own facts, in other words, to ensure that the debt can properly be discharged by a Chapter 7 or Chapter 13 bankruptcy. There are few, if any, genuinely bright-line rules in the bankruptcy process, and this is one of the primary reasons an experienced bankruptcy attorney should be retained to assist you with a Chapter 7 bankruptcy and, particularly, a Chapter 13 bankruptcy. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.

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