TN 38 (09-09)
SI 02220.040 Supplemental Security Income (SSI) Overpayment - Recovery Through Bankruptcy Proceedings
1. Filing a bankruptcy petition
The individual liable for repayment of a title XVI overpayment may petition the Bankruptcy Court under the Bankruptcy Act and include title XVI overpayment(s) as an unsecured debt.
2. Automatic stay
Upon learning of the filing of a bankruptcy petition listing a title XVI debt, we immediately stop any collection activity on the title XVI debt. We stop all collection activity regardless of whether the name of the title XVI debtor is shown as a debtor on the bankruptcy petition.
Generally, when the court discharges a bankruptcy petition, we are precluded from any further attempt to recover any title XVI debt that existed prior to the filing of the bankruptcy petition.
Filing a bankruptcy petition automatically stays (stops) all efforts to recover any debt that arose prior to the filing. This automatic stay is applied regardless of whether the debt(s) are listed in the bankruptcy petition.
The automatic stay also applies to individuals whose debt is listed in the bankruptcy petition even if the debtor’s name is not listed in the petition.
Example: A title XVI child recipient has a debt listed in the bankruptcy petition, but is not shown as a debtor. All recovery efforts against the child’s debt must immediately stop.
1. The Field Office (FO) is notified of bankruptcy proceedings
Take the following actions when you are notified of bankruptcy proceedings.
If you receive a report of a bankruptcy filing from a source other than the Bankruptcy Court, determine whether we are listed as a creditor. For instructions on making this determination, see GN 02215.190B.
The effective date for stopping recovery efforts is the date the bankruptcy petition is filed in Bankruptcy Court.
Stop all recovery efforts on all debts (overpayments) which occurred prior to the date the bankruptcy petition was filed.
Stopping all recovery efforts includes stopping recovery efforts against an overpaid child or an overpaid eligible spouse regardless of whether the child or spouse is listed as a debtor in the bankruptcy petition.
Take the following actions to suspend overpayment recovery.
For current pay cases delete the RECOVER BY CHECK ADJUSTMENT (D TAC) decision through the Add/Change/Delete overpayment Decisions (UODC) screen. For instructions on deleting recovery by check adjustment, see SM 01311.130 and MSOM BUSSR 004.007.
Post a BANKRUPTCY (MS TAC) decision through the Overpayment Decisions (UOPD) screen. For instructions on posting a MS TAC, see SM 01311.220 and MSOM BUSSR 004.008.
For non-pay cases, change the RECOVER BY INSTALLMENTS (G TAC) or RECOVER BY CHECK ADJUSTMENT decision through the Add/Change/Delete overpayment Decisions (UODC).
Post a BANKRUPTCY (MS TAC) decision through the Overpayment Decisions (UPOD) screen. For instructions on posting a MS TAC, see SM 01311.220 and MSOM BUSSR 004.008.
Refund the amount recovered in the month the bankruptcy petition was filed and for any subsequent month(s). Use the A-OTP process to refund the recovered amount(s). For instructions on the A-OTP process see SM 01901.005, MSOM BUSSR 003.022 and MSOM BUSSR 004.007 through MSOM BUSSR 004.009.
When the bankruptcy notice indicates that a Proof of Claim should not be filed, follow Regional instructions, otherwise, send the Regional Office (RO) a copy of the bankruptcy proceedings. Attach the file. The file contains any documents that may provide useful information and system records relating to the bankruptcy (e.g., the overpayment and other notice(s), current queries (some examples are the MBR, SSID, SEQY, New Hire, HA-04, CPMS), and the folder (including, but not limited to, WMSSICS, MCS, Claims File User Interface (CFUI), Appeals Review Processing System (ARPS), NDRed).
For cases not sent to the RO, follow the instructions in SI 02220.050.
2. Regional Office (RO) procedure
When you receive a bankruptcy case from a FO, take the following actions.
Determine whether any of the exceptions in GN 02215.195F to filing proof of claim apply.
If a claim can be filed, prepare the following for the signature of the ARC MOS for referral to the U. S. Attorney:
A statement of indebtedness. Instructions on the preparation of a statement of indebtedness are in GN 02215.260;
The Claims Collection Litigation Report (CCLR). Instructions on the preparation of a CCLR are in GN 02215.270; and
The Bankruptcy Form 410. Obtain the form 410 and instructions for completing it here.
Forward the letter of transmittal, the proof of claim, the statement of indebtedness, the notice of bankruptcy, and the financial information to: U.S. Department of Justice
Central Intake Facility
2 Constitution Square
145 N Street, N.E., Room 5E.307
Washington, DC 20002
3. Actions while the bankruptcy petition is pending
Refund of an overpayment is received
The automatic stay of collection while a bankruptcy petition is pending prevents the acceptance of any refund received to repay any part (or all) of the debt in the bankruptcy petition.
Never accept a refund.
Refund any amount inadvertently accepted.
Use the A-OTP process to refund the recovered amount(s). For instructions on the A-OTP process, see MSOM BUSSR 003.022 and MSOM BUSSR 004.007 through MSOM BUSSR 004.009.
An underpayment is determined
The automatic stay of collection while a bankruptcy petition is pending prevents the use of any underpayment to reduce any overpayment that is included in the bankruptcy petition in the month the petition is filed and any prior months.
Waiver is requested
A liable overpaid individual can request waiver of recovery of an overpayment at any time. For instructions on processing waivers, see SI 02260.001.
If a request for waiver is received after the bankruptcy petition is filed, follow normal waiver development. Policy and procedures for processing a waiver request are in SI 02260.000.
Regardless of the amount of the overpayment and regardless of whether you approve or deny the waiver do not post your decision. Instead:
Inform the RO of your decision for their review and concurrence.
Forward all documents relating to the waiver and your decision to the RO.
If the RO concurs, post and document your decision. Follow the procedures in SI 02220.005.
A subsequent overpayment
If subsequent to the date the bankruptcy petition is filed an overpayment occurs, recover this subsequent overpayment using normal recovery procedures. For recovery procedures, see SI 02220.000. However, if part of the subsequent overpayment covers pre-petition month(s) the pre-petition part of the overpayment is protected from recovery by the automatic stay provisions and cannot be recovered.
4. The bankruptcy petition is dismissed or discharged
Whether you can resume overpayment recovery efforts depends upon the terms of the discharge order. You cannot take any recovery action that is not allowed by the terms of the discharge order. The Bankruptcy Court’s order dismissing or discharging the petition is binding on us unless the Regional General Council files an objection.
If the bankruptcy proceedings are dismissed or the discharge order exempts the title XVI debt from discharge (i.e. the debt either in whole or in part must be repaid), resume normal collection procedures. For recovery procedures, see SI 02220.000.
For current pay cases, complete the Overpayment Decisions (UOPD) screen and select RECOVER BY CHECK ADJUSTMENT to resume collection. For policy and procedures for the UPOD screen, see SM 01311.115 and MSOM BUSSR 004.007.
For non-pay cases, complete the Update Sequence Data (UOSD) screen and select DELETE to delete the SUSPEND BILLING indicator M. For policy and procedures for the UOSD screen, see SM 01311.421 and MSOM BUSSR 004.006.
If the bankruptcy petition is discharged and the discharge order does not exempt the title XVI debt from discharge, the amount of the debt covered by order (i.e., the amount of the debt that arose prior to the date of filing of the bankruptcy petition) is uncollectible.
N TAC the uncollectible overpayment following the instructions in SM 01311.280.
Policy and procedures on filing an objection to the Bankruptcy Court’s order are in GN 02215.196.
GN 02215.185 - Bankruptcy Proceedings - Overview
GN 02215.190 - Debtor Involved in Bankruptcy Proceedings – FO Procedure
GN 02215.196 - Objection to a Discharge in a Chapter 7 Bankruptcy – PC Procedure
GN 02215.200 - PC Preparation of Proof of Claim - Bankruptcy
GN 02215.230 - Result of Bankruptcy Proceedings – PC Procedure
GN 02215.260 - Certificate of Indebtedness - Exhibit
GN 02215.270 - Claims Collection Litigation Report – Exhibit
MSOM BUSSR 004.006 - Update sequence data (UOSD)
MSOM BUSSR 004.007 - Add/Change/Delete Overpayment Decisions (UODC)
SI 02260.001 - Basic Requirements Concerning Supplemental Security Income (SSI) Overpayment Waiver
SI 02220.005 - Documenting the Supplemental Security Income (SSI) Overpayment
SI 02220.050 - Suspension and Termination of Recovery Efforts from Living Individual
SM 01311.220 - Bankruptcy and Referral to Another Agency – MJ, MO, MS and MT TAC
SM 01311.280 - Uncollectible and Erroneous Overpayment Decisions N TAC and NT TAC
SM 01311.421 - Suspend Billing Codes