Can a social security overpayment be wiped out in a bankruptcy?
Sometimes people that are receiving social security will receive a notice that there is an alleged overpayment, and that they are going to get a significant portion of their monthly social security check garnished and sent back to the government to pay off this overpayment debt. In many cases these people dont even know the facts that caused this alleged overpayment. This is the first time they have heard about it. A lot of people think that just because it is the federal government that they owe money to, they can't get a discharge, or a bankruptcy discharge wont wipe out that portion of the debt. That is not true. If a person is receiving a social security check every month, and a portion of that is being garnished to pay back this alleged overpayment, a bankruptcy discharge wipes out that debt and entitles the social security recipient to receive all of their future social security checks. Of course some people ask me what about if it is an incident of fraud. Bankruptcy will not wipe out fraudulently incured debts. That is an exception to the rule. The vast majority of people with alleged overpayments that I've seen have no issues about fraud. They have just received an overpayment, allegedly, and those debts are wiped out in a Chapter 7. If you are in this situtation, give us a call or contact us online and we would be happy to help out.