Do You Have to Repay a Non-Fault Overpayment?

If you received a non-fault overpayment from Social Security or a state unemployment agency, you may not have to pay it back. Federal law lets you request a waiver, and if you show that the overpayment wasn’t your fault and that repaying would either leave you unable to cover basic living expenses or be unfair given what you did in reliance on the money, the debt can be eliminated entirely.¹ Timing matters: file the waiver within 30 days of the notice and the agency pauses collection while it reviews your request.²

What Counts as a Non-Fault Overpayment

A non-fault overpayment happens when the agency miscalculates your benefit, processes a payment late, or acts on incorrect information from an employer. You received more than you were entitled to, but you didn’t cause it by giving false information or by failing to report a change that affected your eligibility.

Whether an overpayment is your fault is the first question every waiver decision turns on. You must be “without fault” to qualify for a waiver at all. Once that hurdle is cleared, the question shifts to whether you meet one of the two standards for wiping out the debt.

When Social Security sends an overpayment notice, it has to tell you the amount, how and when the overpayment happened, your right to request a waiver, and your right to request reconsideration of the overpayment itself.³ State unemployment agencies send similar notices, though format and deadlines vary by state.

The Two Tests That Can Cancel the Debt

Federal law says the government cannot recover an overpayment from someone who is without fault if recovery would either defeat the purpose of the benefit program or be against equity and good conscience.¹ State unemployment programs use the same two standards in most cases.⁴ You only need to satisfy one.

Defeat the Purpose

This is the financial hardship test, and it’s where most successful waivers land. Recovery defeats the purpose of the program when forcing repayment would strip away the income you need for basic living expenses.

Social Security’s internal guidelines put numbers on this. Your monthly household income cannot exceed your monthly expenses by more than $250, and your total resources cannot exceed $6,000 for a single person or $10,000 if you have one other household member. Add $1,200 for each person beyond that.⁵ The $250 cushion is there to cover small unbudgeted costs. If you fall within those limits, the agency should find that recovery defeats the purpose.

Against Equity and Good Conscience

This standard doesn’t look at your finances. It applies when you relied on the overpayment in a way that changed your situation for the worse, or when you gave up a valuable right because you believed the payment was correct.⁶ Turning down a different benefit or declining a job because you were counting on the higher payment is a common example. The standard also protects someone who lived in a separate household from the overpaid person and never actually received the money.

How to File the Waiver

For Social Security overpayments, complete Form SSA-632, the Request for Waiver of Overpayment Recovery. You can submit it through your my Social Security account online or print and mail the form.⁷ For unemployment overpayments, the process depends on your state agency, but the principle is the same: a written request with supporting documentation showing you weren’t at fault and meet one of the two waiver standards.

There is no time limit for filing a Social Security waiver request.⁸ The 30-day window matters for a different reason: file within 30 days of the notice and the agency pauses all collection while your request is under review. Wait longer and repayment may already have started by the time you file. State unemployment deadlines tend to be much tighter and vary widely.

Documentation for the Hardship Argument

If you’re going with “defeat the purpose,” you need to paint a detailed picture of your household finances. The SSA-632 asks for complete information about income, assets, and monthly expenses, and the agency expects supporting documents dated within three months of your request:⁹

Current pay stubs for everyone in your household and your most recent tax return
Recent checking and savings account statements
Rent or mortgage statements
Two or three recent utility, medical, insurance, and credit card bills
Canceled checks showing regular payments you make

The goal is to show that your monthly income barely covers your monthly expenses. Keep the $250 threshold in mind: if income exceeds expenses by more than $250 a month, the hardship argument gets significantly harder.⁵

Your Written Explanation

Attach a personal statement explaining why the overpayment wasn’t your fault and why repayment would cause real harm. If you’re arguing hardship, walk through your budget and point to the attached documents. If you’re arguing equity, explain what you did in reliance on the payment. Specifics carry the argument. “I can’t afford it” is weaker than “My rent increased by $200 last year and my prescriptions cost $340 per month, leaving me $180 short of covering basic expenses even without the repayment.”

Waiver Is Not the Same as Reconsideration

These two requests are commonly confused because they both involve disagreeing with an overpayment notice. They are separate processes, and you can file both at the same time.¹⁰

A reconsideration challenges the overpayment itself. File one if you believe the agency has the amount wrong or you weren’t overpaid at all. For Social Security, use Form SSA-561, and file within 60 days of receiving the notice. The agency assumes you received the notice five days after the date printed on it.⁸

A waiver doesn’t dispute the overpayment. You’re saying yes, I was overpaid, but it wasn’t my fault and I shouldn’t have to pay it back. If you’re not sure the amount is right and you also can’t afford it, file both. There’s no penalty, and each protects a different angle.

What Happens If You Do Nothing

Ignoring an overpayment notice is the worst option. Doing nothing triggers automatic collection at the maximum rate, potential tax refund seizure, and credit damage.

The most common collection tool is benefit withholding. As of March 27, 2025, Social Security reinstated a 100% withholding rate for new overpayments, meaning the agency will withhold your entire monthly benefit until the debt is repaid.¹¹ If you can’t afford full withholding, you can contact Social Security to request a lower rate. The agency can also recover from one program using benefits from another: if you owe on a Social Security overpayment but now receive SSI, the agency can withhold from your SSI payment to cover the older debt.⁸

If you’re no longer receiving benefits or have fallen behind on a repayment agreement, the Bureau of Fiscal Service can intercept your federal tax refund to cover the debt. That applies to Social Security overpayments and certain unemployment compensation debts owed to a state.¹² The agency must give you at least 60 days’ notice before referring the debt. Call the Bureau of Fiscal Service at 800-304-3107 to check whether any debts are flagged against your refund.

Agencies can also garnish wages, capped by federal law at the lesser of 25% of your disposable earnings or the amount by which your weekly earnings exceed 30 times the federal minimum wage.¹³ Delinquent overpayment debts also get reported to credit bureaus.⁸

If Your Waiver Is Denied

A denial isn’t the end. The denial notice explains why the agency reached its decision, and you have two practical options.

Appeal

For Social Security, you can request a hearing before an administrative law judge, generally within 60 days of receiving the decision.¹⁴ The judge focuses specifically on the overpayment issue, and you can submit additional evidence or documentation that wasn’t part of your original request.¹⁵ State unemployment appeal deadlines are typically shorter, often 30 days or less.

Ask for a Lower Repayment Rate

Even without a waiver, you don’t have to repay in a lump sum. Complete Form SSA-634 and provide the same financial documentation as the waiver application: bank statements, pay stubs, bills, and your tax return, all dated within three months.¹⁶ The agency will approve a lower rate if it allows full recovery within 60 months. If your proposed payment would stretch longer, a representative will review your situation and decide. If you’ve stopped receiving benefits entirely, you can still set up installment payments directly rather than waiting for garnishment or a refund offset. Proactive contact almost always gets you better terms than forced collection.

A Note on SSI Overpayments

If your overpayment involves Supplemental Security Income rather than regular Social Security, the framework is the same. The waiver standards are identical, you use the same SSA-632 form, and you follow the same appeal process if denied.¹⁰ One important difference: the default withholding rate for SSI overpayments remains at 10% of the maximum federal benefit, not the 100% rate that now applies to new Social Security overpayments.¹¹

Filing a waiver within 30 days freezes collection while the agency reviews your request, and it costs nothing to file. If the overpayment wasn’t your fault and you meet one of the two standards, that filing is what stands between you and repaying money you shouldn’t have to repay.

1
Office of the Law Revision Counsel. 42 US Code 404 – Overpayments and Underpayments
2
Social Security Administration. Resolve an Overpayment
3
Social Security Administration. Code of Federal Regulations 404.502a
4
U.S. Department of Labor. Unemployment Insurance Overpayment Waivers
5
Social Security Administration. GN 02250.100 Defeat the Purpose (Ability to Repay) of Title II
6
eCFR. 20 CFR 404.509 – Against Equity and Good Conscience; Defined
7
Social Security Administration. Ask Us to Waive an Overpayment
8
Social Security Administration. Overpayments
9
Social Security Administration. SSA-632-BK – Request for Waiver of Overpayment Recovery
10
Social Security Administration. Overpayments – Supplemental Security Income (SSI)
11
Social Security Administration. Social Security to Reinstate Overpayment Recovery Rate
12
Taxpayer Advocate Service. How to Prevent a Refund Offset
13
U.S. Department of Labor. Fact Sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act (CCPA)
14
Social Security Administration. Understanding Supplemental Security Income Appeals Process
15
Social Security Administration. SSA’s Hearing Process
16
Social Security Administration. SSA-634 – Request for Change in Overpayment Recovery Rate