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Social Security Benefits backpayment and Chapter 7

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fred834

Junior Member
What is the name of your state?OREGON


Back in April of 2002, my wife suffered a stroke that left her disabled. At that time, we both worked for the same company. From April 2002 to July 2002, she received short term disaility from the State of California and AIG. In July 2002, the short term disability was changed to long term disability. We moved back to Oregon in Augut of 2002. Shortly after our return to Oregon, we hired an attorney to take care of my wife's disability claim with Social Security. My wife received her final payment from AIG on july of 2004. On September of 2004, my wife was officially recognized as disabled by Social Security as of April of 2002, and entitled to Social Security benefits payment as of October 2002. We are thus in the process of receiving a backpayment from Social Security that should be in the range of $31K. The attorney signed a waiver refusing to receive his share of the backpay from Social Security Directly and opted to have my wife repay him directly. THe AIG long term disability policy states that the funds we are going to be receiving should be repaid to them in full, minus attorney's fees. My wife never signed or agreed to the terms contained in that policy to begin with. It is our intention to retribute our attorney for his work but to dispute the claim made by AIG. Now, as a result of her medical condition, we have incurred large amounts of bills that are forcing us to consider filing for Chapter 7 bankruptcy. I consulted with an attorney tonight about that issue and she was not able to tell me whether or not that backpay benefits from Social Security would be considered as EXEMPT under Oregon Law when we decide to file, or if the trustee would be legally able to attempt to seize that amount to repay our creditors, all of which are unsecured. I have contacted a couple different lawyers who are basically telling me they can't really give an advice unless they get retained, but that they think that the backpay should be considered as exempt and that tehrefore, the trustee would have no recourse to those funds.. Does anybody here on this board know the answer to this question or can anyone provide any links or resources so I could find the definitive answer to this question. Your help is greatly appreciated.
 


M

morona

Guest
supplemental insurance?

CA. It would seem to me that you should reveiw your insurance policy. I believe that you must have paid premiums and should be entitled to the short-term benefits provided. The determination of long-term disability might be disputed if they are not obligated to pay benefits for treatments or coverages that exceed the limits stated on your contract. Otherwise, how would they authorize or approve benefits initially? Simply put, if you recieved excessive benefit amounts that helped during your time of need and now they are penalizing you it still seems extreme! If nothing else I would try to negotiate a premium adjustment to lessen any hardship you might suffer.
 

ShyCat

Senior Member
THe AIG long term disability policy states that the funds we are going to be receiving should be repaid to them in full, minus attorney's fees.
Yes, that's a common provision, part of the coordination of benefits with Social Security. Your wife's monthly AIG benefits are reduced by the disability amount paid by Social Security. The backpay is simply a catch up for the monthly benefits, so the same offset applies.

https://law.freeadvice.com/insurance_law/disability_insurance/coordinate_monthly_disability.htm


My wife never signed or agreed to the terms contained in that policy to begin with.
Assuming this was an employer-provided benefit, it did not require the employee's agreement or signature. The one who pays has the say.
 

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