This is what happens when the government targets you for zombie debt collection.
You receive a letter from your state’s department of human services claiming that you were “overissued” $4,132 in food stamp and cash benefits in the 1980s. Enclosed is a copy of the original overpayment notice they say they sent you when you were still listening to Madonna and Bobby Brown.
You don’t remember ever seeing it before.
The letter informs you that, since you didn’t respond immediately three decades ago, your 90-day window to request a fair hearing and contest the overpayment has closed. You now have a debt, and it’s past due.
The state threatens to refer this debt to the United States Department of Treasury, which has the power to withhold your federal tax return, your earned income tax credit, a portion of your military retirement pay – even your social security disability check. You are barely making ends meet, so the financial loss might mean doing without meals, a utilities shutoff, or skimping on medication.
If they can’t get the money from you, they will withhold your adult children’s tax returns. You read this correctly: the federal government will take your children’s money to resolve a 30-year-old alleged public benefits overpayment.
If private zombie debt is surprisingly easy to kill – asking a collection agency for proof the debt exists can often make it vanish forever – government zombie debt is just the opposite, rising like a phoenix from the ashes of the most difficult times in people’s lives, over and over again.
This is what puzzles Pegues most – why is he being held responsible for paying back an overpayment that the state admits is their fault? “The thing that I find is funny is that they told me what I was getting,” he said. “I didn’t pick it.” He had to be recertified as eligible to continue receiving benefits every six months. Each time the agency evaluated his case, they continued granting him benefits. “They kept on re-evaluating me, but they kept sending me money. Then I got that letter that I owe them $7,500.”
After the cost of billing and postage, appeals and case management, Illinois is losing money collecting from people like Pegues.
Pondera Solutions, a company based in Fulton, California, says it can search massive public and private databases, comb through social media and use proprietary (and secret) predictive models to rank every single applicant to a government program “based on their risk for fraud”.
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