If this question caught your eye, you may have recently received a written demand from the social security administration to repay an overpayment and possibly a notice stating that future benefits will stop as well. This is a common occurrence, and one that can significantly change your financial circumstances. The good news is that there may be a solution to this problem.
The quick answer to whether a social security overpayment can be eliminated in bankruptcy is, in most cases, yes. This is because the U.S. Bankruptcy Code does not give the Social Security Administration (SSA) any special protection or priority status, but rather treats them like any other general unsecured creditor. However, there could be special facts in each case that could affect the outcome.
One concern would be whether fraud or false pretenses was involved in obtaining the social security benefits. In this case, the SSA could contest the elimination of the debt owed to it. To do this, the SSA would have to successfully object to the discharge of the debt while the bankruptcy case is open. If it was successful in this endeavor, the overpayment would not be eliminated. Yet, even if the SSA could make a case for fraud or false pretenses, it rarely takes that step.
If you are facing a Social Security benefit overpayment we encourage you to seek counsel to assist you in taking the best course of action.