Would you know what to do if the Social Security Administration mailed you a letter stating that you have been overpaid and that you owe the government tens of thousands of dollars? No problem, this oversight can be eliminated in a bankruptcy filing. My colleague, attorney Jonathan Ginsberg in Atlanta, Georgia practices both bankruptcy law and Social Security law and I asked him to answer the question “can bankruptcy help you if you owe Social Security for a disability overpayment?” Here is what Jonathan says:
Surprisingly, the answer is yes – as a general rule Social Security disability overpayments are dischargeable in bankruptcy. You can use Chapter 7 to wipe out overpayment claims or Chapter 13 to pay back these claims as general unsecured debts.
Why Social Security Disability Overpayments Happen