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Are LTD repayment benefits balances through private insurance dischargable with chapter 7?

Oviedo, FL |

After back payment of SSI, the insurance company wants that money back and I am in the process of filing Chapter 7

Attorney Answers 2


Generally speaking, the overpayment of a federal benefit (i.e., social security disability) is a dischargeable debt under the bankruptcy code. This general rule, however, can be subject to a couple very specific facts and circumstances exceptions. First, if any consumer obtained the social security disability benefit through fraud (i.e., lied on your SSD application) there is a chance that the federal government may challenge the discahrge of that debt. If they have storng facts showing the consumer lied on the application, this debt could be excpeted from the discharge.

The other issue that many times comes up is that while the lawfully obtained overpayment of social security disability can be discharged, the federal government can offset the overpayment of previous benefits against future benefits. So, while it may be discharged in certain circumstances, net-net, the consumer may still end up bearing the burden through lower future benfit payments.

DISCLAIMER: This answer in now way tries to create an attorney-client relationship. If you have specific questions about your individual facts and circumstnaces, I would advise setting an appt. for a free initial consutlation with an attorney who focuses on BKs in your community.

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Your question seems to concern owing the private insurance company, not the feds. As a general rule, all pre-petition debts are dischargeable unless an exception applies. There is no exception for overpayment of private insurance benefits unless the benefits were received through the fraud of the beneficiary.

This answer is for informational purposes only and should not be construed as legal advice or as establishing an attorney-client relationship.

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