In a significant victory for Social Security recipients, the Ninth Circuit Court of Appeals has ruled in Cooper v. Social Security Administration, reinforcing the vital protections that bankruptcy provides for individuals who have been overpaid Social Security benefits. The court held that the Social Security Administration (SSA) cannot bypass bankruptcy discharge protections to recover overpaid benefits from individuals who have not engaged in any wrongdoing. The ruling confirms that the SSA’s practice of withholding 100% of a recipient’s current benefit payments to recover pre-bankruptcy overpayments is impermissible under bankruptcy law.
“This decision is a lifeline for struggling Social Security beneficiaries who find themselves trapped by government overpayment errors,” said NCBRC President Henry J Sommer. “It ensures that individuals who have filed for bankruptcy are not left impoverished due to administrative mistakes.” The National Consumer Bankruptcy Rights Center (NCBRC) is a leading advocate for consumer bankruptcy protections. The National Association of Consumer Bankruptcy Attorneys (NACBA), of which Nancy Thompson is a member, played an instrumental role in supporting this legal effort, further demonstrating its commitment to protecting the rights of consumer debtors nationwide.
For thousands of Social Security recipients who have received benefit overpayments due to SSA errors, this ruling confirms that bankruptcy remains a viable path to financial relief. Without this protection, vulnerable individuals—many of whom are elderly or disabled—would face the impossible burden of losing their only source of income. “This ruling sends a clear message: bankruptcy protections work, and they extend to those receiving Social Security benefits,” said NACBA President Richard Nemeth. “We are proud that NACBA and NCBRC could contribute to this major win for consumer debtors.”
The Ninth Circuit’s decision reverses the lower courts’ rulings, clarifying that equitable recoupment cannot be used to undermine the fresh start that bankruptcy provides. This outcome aligns with the fundamental purpose of the Bankruptcy Code: to grant relief to honest but unfortunate debtors and to prevent them from being subjected to unmanageable financial burdens. As a result of this ruling, Social Security recipients who have been subjected to aggressive attempts to recover overpayments should contact Nancy L. Thompson Law Office to determine how this decision may impact their cases.
