Borrowed money and Supplemental Security Income SSI

It can be very difficult to get by on the small amount of Supplemental Security Income (SSI) pays. Many individuals are forced to borrow money from friends or family just to make ends meet. But, how can this negatively affect SSI eligibility?

If you need to borrow money from family or friends, you may be able to do this without affecting SSI eligibility. According to Social Security regulations, a loan is not considered income:

(f) Proceeds of a loan. Money you borrow or money you receive as repayment of a loan is not income. However, interest you receive on money you have lent is income. Buying on credit is treated as though you were borrowing money and what you purchase this way is not income.

However, it has to be clear and provable to Social Security that the money was aloan and not a gift. SSI is a “needs based” program. If a friend of family member is providing money, food, clothing or shelter, the SSI benefits may be reduced or stopped altogether. The same goes for someone paying your bills for you.

I have had a number of cases where a client lives with family while the SSI cases is winding its way through the SSA system. If the claimant is expected to pay back the cost of rent or utilities, I encourage using a written agreement (it does not have to be formal) stating what the claimant will pay for, and an itemization of the expenses.

Keep in mind that this is not fool-proof! However, it can help show Social Security that the money or other assistance was a loan and not a gift.

Photo by Tax Credits

  • SS Disability

    This is extremely important, especially in SSI disability cases. The problem is the people go so long without any income, that they frequently have to find themselves asking for money. Sometimes their friends and family see what they have been going through, and just want to help them out by giving them money. However, as you mention, if the money is a gift instead of a loan, it can affect the SS Disability that they claimant would otherwise receive. I am glad to see someone is educating claimants about this important issue.

  • Papabrown912

    Can i get a small loan if i am on disability the loan is under 1000.00 and who can i trust if my bank denies me it is an emergency loan to help me medically, get an infusion for pain

  • lisa

    will a gift “definately” prevent you from getting ssi? if that is true, my 3 year fight was all for nothing :( a friend has been keeping us from losing the house! and I have children!

    • lisa

      I lost my first hearing. did my own appeal and was remanded back to a new judge who said along with an occ expert “for the record” that I had good credibility which was the “only” problem the first time. Its been about 75 days waiting for a decision. Also I have many years of qualified medical and two occupational experts testified I can not work…… at first hearing and second. I thought it was a no-brainer until I read this :(

      • http://stasiukfirm.com/ TomaszStasiuk

        Hi Lisa. I can’t tell you how this may affect your case. Gifts may affect an applicant’s resources or be treated as in-kind support and maintenance. Either of these can affect the amount an applicant receives from SSI or may preclude eligibility. There is more information in the SSA Handbook http://www.ssa.gov/OP_Home/handbook/handbook.21/handbook-toc21.html (particularly the Income and Resources sections). However, it is fairly dry reading.