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SOCIAL SECURITY

Do You Owe Money to the Government?

Do you owe an overdue loan to the government-maybe it's a student loan? Or, do you owe another type of non-tax debt to the Federal government? If you answered yes to either question and you receive more than $750 a month in Social Security benefits, Uncle Sam has figured out how to get back the delinquent debt that is owed to him.

First, the agency that you owe money to will send you a notice-you may have gotten one already. They must send you a notice before they try to collect the debt from your Social Security benefit payments. The notice explains what debt you owe, how to ask for a review of the debt, and how to make arrangements to repay the debt if you cannot pay it in full. If you don't make arrangements to pay the debt, that agency will notify the U.S. Department of the Treasury that you owe a delinquent debt.

Starting March 2001, the Treasury will send letters to Social Security beneficiaries whose benefit payment can be reduced to collect delinquent debts owed to a government agency. The letter will tell you the agency you are indebted to and include a telephone number so you can contact that agency to get answers to questions you may have about the debt. Social Security and the Treasury can only answer general questions about the reduction of your benefit amount to collect a non-tax debt.

When you receive the first letter warning that Treasury is going to deduct money from your Social Security benefit payment, you still have two months to contact the agency trying to collect the debt to make arrangements to repay the debt. If you file (or have filed) for bankruptcy protection, you should tell that agency immediately.

In May 2001, the Treasury will begin to deduct a maximum of 15 percent from your monthly benefit payment until you pay the debt or the agency collecting the debt stops the process. You will get a letter each month telling you when the deduction occurred, how much was deducted from your benefit payment, the agency collecting the debt and a telephone number to call that agency.

In 1996, the Congress passed the Debt Collection Improvement Act to collect overdue debts to the government. The law requires the Federal government to reduce or withhold up to 15 percent of your Social Security benefit payment if you owe a delinquent debt to the United States. The money withheld is applied to your debt.

For more information go to http://www.fms.treas.gov/news/factsheets/benefitoffset.html