Recently clients are running into issues with the SSA field office when they win benefits…and then try to get benefits actually paid. They are finding that their benefits are cut, regardless of whether they have written loan agreements.
There are specific rules about loan agreements. A loan must:
- Be enforceable under state law;
- Be in effect at the time that in-kind support and maintenance is provided;
- Contain an acknowledgement of an obligation to repay;
- Contain a plan for repayment;
- The repayment plan must be “feasible”.
Unfortunately, what seems to be happening, on a random basis, is that SSA field offices are ignoring these rules. Most often, the issue seems to be with # 5.
According to the rules, it is okay to say that the claimant anticipates using disability benefits (The POMS specifically describes “[t]he claimant may use anticipated income such as Title II, Title XVI, Veterans benefits, etc., to establish a plan for a feasible repayment of the loan as long as the loan states the claimant must pay the money back.” ).
But even with an award of benefits, if the amount loaned is too high, you may find that the SSA field office says it’s not feasible to be repaid.
Here is the advice we give our clients:
- Make sure there is nothing inconsistent between your application and the loan agreement.
- Keep the loan amount low.
- Make sure that all concerned understand that it must repaid whether or not the claimant gets benefits.
- Include a specific plan for repayment of money owed up to date of hearing. Keep the payments low.
- Describe how claimant will obtain the funds to repay in the even he is not approved. This is the hardest one. Collect cans? Await an inheritance? We just don’t know what SSA contemplates here.