Social Security Benefits are currently off-limits to Banks, credit card companies and other lenders but the US Government can go after a Seniors benefits to repay delinquent debt. Now they can reach back a little further to get back their money.
The Wall Street Journal is reporting that a provision in the 2008 Farm Bill lifted the ban that prevented the US Government from “offsetting” benefits to pay for debts owed to the US Govt for defaulted loans and other debts more than 10 years old.
The change only impacts debts more than 10 years old and allows the Government to withhold up to 15% of the benefit as long a the benefit does not drop below $750/mo. It is feared that Social Security recipients will bear much of the impact of the additional collection efforts which are estimated to bring in an additional $10,000,000 per year on unpaid non-tax delinquent debt.
Not that they shouldn’t be held accountable like everyone else to repay money owed but the government certainly picked an interesting time to go after the finances of the nations struggling senior population. Some of those impacted are already living on a limited fixed income barely able to make ends meet. A 15% pay cut will certainly prove painful.
Filed under: Reverse Mortgage |
Neil Sweren's Interesting Points 
Does an FHA loan defaulted on more than 10 years ago qualify as one that the Federal Government can start collecting on by withholding 15% of my Social Security – or are FHA loans exempt? Please respond ASAP. Thank you.
Mary, I am not aware of any specific exemptions for defaulted FHA loans.
My FHA-underwritten loan was foreclosed upon in 1994. I went through a real estate lawyer here in Arizona. He said nothing about my having to pay income taxes on the unpaid balance, but I’ve recently learned that that is considered income and needs to be declared as such. I am now on Social Security as my sole income. Can they take these taxes out of my Social Security? I’ve heard that the IRS only researches your file back 3 years. What should I do? Please respond – am getting nervous now.