Thousands of Social Security recipients face potential garnishment of up to half their benefits; learn how to legally shield your income from this collection practice
The Social Security Act, signed into law by President Franklin D. Roosevelt in August 1935, provides a financial foundation for aging workers, workers with disabilities, and survivors of deceased workers. However, overpaid beneficiaries may face the challenging situation of having to repay extra benefits. Fortunately, there are three legal options available to help manage or avoid Social Security garnishment.
First and foremost, overpaid beneficiaries who can demonstrate a financial hardship may have their garnishment rate reduced and/or be set up on a payment plan spanning up to 60 months (five years) with Form SSA-634. This form is an option for those who request a way to manage how much or how long their Social Security payout will be garnished.
Another choice is to file Form SSA-561 (Request for Reconsideration). This can be done by overpaid beneficiaries who believe they haven't been overpaid and the SSA made a mistake, or who agree that they've been overpaid but are contesting the amount the SSA seeks to recover. SSA-561 can result in an overpayment liability being waived, or can potentially reduce how much an overpaid beneficiary needs to repay.
The most favorable option would be to have the overpayment completely waived/forgiven with Form SSA-632BK. Filing this form may be an option for overpaid individuals who can demonstrate to the SSA that paying back the extra benefits would create a financial hardship.
It's important to note that over 1 million Social Security beneficiaries have experienced garnishment of up to 50% of their checks due to changes implemented under the Donald Trump administration. These changes, which included ending paper checks by Sept. 30, transitioning to direct deposits, and ramping up personal identification measures, also altered the monthly garnishment rate associated with benefit overpayments. The SSA adjusted the rate from 100% to 10% during Joe Biden's presidency, but later increased it to 50% in April 2023.
As of the end of fiscal 2023, nearly 2 million Social Security beneficiaries had not paid back approximately $23 billion in aggregate overpayments. This underscores the need for overpaid beneficiaries to explore their options for reducing or avoiding Social Security garnishment.
Lastly, a little-known strategy could help ensure a boost in retirement income, potentially paying up to $23,760 more each year, but it requires learning how to maximize Social Security benefits.
Most retirees rely on their Social Security income to make ends meet, making it crucial for overpaid beneficiaries to understand their options and act promptly to protect their financial wellbeing. Repayment notices were sent to beneficiaries in April 2023, giving them 90 days to satisfy their overpayment before garnishment would begin.
In conclusion, overpaid Social Security beneficiaries may have options to legally reduce or avoid Social Security garnishment. It's essential for affected individuals to familiarize themselves with the available forms and requirements to ensure they can manage their financial situation effectively.
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