By CHERYL S. SPLAIN News Editor
CENTERBURG — The difficult financial times experienced over the last two years have affected virtually everyone in one way or another, and seniors are no exception. For some seniors, however, the financial pinch could become a little tighter.
For seniors who owe federal debts, the U.S. Treasury is allowed to withhold benefits from Social Security checks or disability payments. Under the 2008 Farm Bill, these withholds have become easier because the statute of limitations for most of these debts has been eliminated. The exception is for unpaid income taxes, where the limit is still 10 years.
“Before, there was a 10- year limit on how far Social Security could go back and collect debts,” said C enter- burg attorney Tom Cooper. “Now, up to 15 percent of the person’s Social Security check can be taken, but [the check can] never go below $750 a month.”
For example, he said, if a person’s Social Security check is $850 a month, the lesser of 15 percent of the
$850 ($127.50) or $100 ($850 minus the $750 threshold) can be withheld.
Unpaid student loans, small business loans, income tax and farm debt all can be withheld from a senior’s check. Historically, most of this type of debt was recovered by withholding seniors’ income tax refunds. In 2008, however, $420 million — about 10 percent — was collected from money withheld from Social Security benefits, compared to 1 1/2 percent in 2001.
“What you think is, who wouldn’t want people with debt to Pay it back? But they don’t realize what they are doing when they turn people lose with computers and form letters … it becomes a different situation,” said Cooper. “They estimate it will save the government a fair amount, but I wish there was a different way to do it.”
Cooper said that it is tough enough for a senior on a fixed income to have money withheld from his or her check, especially if health problems compound the financial picture, but perhaps a bigger worry is if money is withheld by mistake.
“If you owe it, that’s a hard
enough problem,” he said. “The big thing is, if it’s a mistake, it’s a hard problem to deal with.
“These things take years to work through,” he said. “You write letters and they go nowhere. You can spend loads of money on legal fees, even if you are right.
“I have heard stories of people who spent small fortunes to get back very little; usually they are doing it on principle,” he added. “These things happened 30 to 40
years ago, and you are not remembering so well what happened. Things are not exactly crystal clear. It can be confusing if the ink has faded.”
Cooper said there is nothing seniors can do to prevent money being withheld.
“You have to deal with it, and maybe if [seniors] get mad enough they can get it fixed,” he said. “I think there’s going to be a lot of headaches and heartaches in this thing.”
