Can I Discharge my Social Security Disability Overpayment in Bankruptcy

30 Jun Can I Discharge my Social Security Disability Overpayment in Bankruptcy

The Social Security Administration is a mess. Currently, SSA is in the midst of an overhaul in which they are attempting to go “paperless.” Unfortunately, they are understaffed with many of the remaining employees overworked and poorly trained, resulting in an agency that routinely loses files, does not process information properly and does not have the resources to deal with fraud and waste.

As a bankruptcy lawyer who also represents disability claimants before the Social Security Administration I see these problems firsthand and on a regular basis. I think that the current leadership at SSA is trying its best and has solved some problems, but like a dike that keeps springing leaks, SSA’s accounting problems are likely to get worse before they get better.

One of the most common problems that arises within the disability program has to do with overpayments. Overpayments happen when a claimant continues to receive and deposit disability payments when he is no longer eligible. This may happen because the claimant returns to work or improves medically to the point where he could return to work.

Social Security notifies claimants about overpayments by mail. If you have received one of these letters it will contain a demand for payment and an explanation as to why SSA thinks you have been overpaid. The letter will also set out your right to demand a review and, eventually a hearing if you contest the overpayment. It will also advise you that you have the right to request a full or partial waiver of the overpayment and associated procedures for such a waiver.

My experience has been that overpayment waivers are rarely granted. Perhaps because of the current economic climate, SSA is less likely to approve benefits and less likely to approve waivers.

What, then, should you do if SSA writes you to say that you have been overpaid by $30,000 and please send us a check by next Monday? Can you file bankruptcy and discharge this overpayment debt?

The quick answer to this question is “yes,” you can discharge Social Security overpayment debt. There is nothing in the Bankruptcy Code or in Social Security law that offers any special protection for the Social Security Administration.

Like any other creditor, however, SSA can object to the dischargeability of a debt pursuant to Section 523 of the Bankruptcy Code – this Code section allows creditors to argue that their debt ought not be discharged because of some type of dishonest or repugnant conduct on the part of the debtor.

Objections under Section 523 of the Bankruptcy Code must be filed by an affected creditor – and I, personally, have never seen a dischargeability complaint filed by Social Security in an overpayment case. That does not mean that Social Security would not or could not object to a bankruptcy but, in my experience, at least, I have not seen it.

I did run across an interesting case involving Social Security that we decided by the Chief Bankruptcy Judge for the Northern District of Georgia. In the case of Diego M. Rodriquez (No. 09-93431-JB), Judge Bihary implied in dicta that Social Security’s failure or inability to follow its own procedures for processing a bankruptcy debtor’s request for an overpayment waiver could be relevant in considering the merits of a dischargeability complaint. If bankruptcy judges would follow this reasoning, debtors would stand an even better chance at seeing overpayment debt discharged in bankruptcy.


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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.
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