Though the law has expanded the age of debts that can be recovered, it hasn't addressed the sometimes-Kafkaesque process debtors can face when challenging the validity of a claim.
Consider the predicament of Robert Steinberg, the founder of Scharffen Berger chocolates, who spent more than six years and thousands of dollars in legal fees appealing the Social Security Administration's claim that he owed it more than $28,000.
Dr. Steinberg received disability benefits in the early 1990s while undergoing chemotherapy for lymphoma, a condition that ultimately claimed his life. Dr. Steinberg returned to work sporadically at a free clinic in San Francisco before co-founding the chocolate company.
A year later, the Social Security Administration notified Dr. Steinberg he was overpaid in the 1990s. In May 2002, with the matter still unresolved, the agency turned the debt over to the Treasury for collection.
In October 2002, administrative law judge Gary Lee found that the Social Security Administration never established the amount of the overpayment; had dismissed an earlier appeal "for spurious reasons"; had misinformed Dr. Steinberg and mishandled his later appeals; and had lost his file. He noted that Dr. Steinberg was "without fault" and told the agency to stop its collections efforts.
Dr. Steinberg died in 2008, at age 61. His lawyer, Peter Young, a former staff attorney for the Social Security Administration, has handled more than 100 overpayment cases, "very few of which were accurate," he says. "Most people can't find or afford help, and give up very quickly and end up with painful offsets on a fixed budget."
An agency spokeswoman says mistakes can happen, but "overall, the process works."
A Treasury spokesman says the new regulations require agencies seeking to recover debts more than a decade old to give debtors the right to review and copy their files, make payment plans, and apply for disability and hardship waivers.
But a recent dispute about a student loan shows that even with these rights, a person challenging an old debt can face hurdles similar to homeowners in foreclosure trying to modify a loan that has been resold.
In 2003, the U.S. began withholding $173 a month in Social Security benefits from Annie Brown, a paralyzed 75-year-old widow of a civil-rights worker who is living in a nursing home, to repay a defaulted $8,823 student loan the Education Department says she took out in 1989.