I-1-2-3.Representative(s) Who May Charge and Collect a Fee

Last Update: 12/9/24 (Transmittal I-1-108)

A. Who May Charge a Fee

Only appointed representative(s) may charge a fee for services the representative provided to the claimant before the Social Security Administration (SSA). A claimant must make all appointments using a Form SSA-1696 “Claimant's Appointment of a Representative” (refer to Program Operations Manual System (POMS) GN 03905.030). Generally, if a law firm or other entity is involved, only individual representative(s) from that firm or entity may file a fee agreement or petition. If a representative dies, a legal representative of the deceased representative's estate or an entity's point of contact (POC) if there is a valid assignment, may file a fee petition on behalf of the deceased representative for the services provided by the representative before SSA. See HALLEX I-1-2-53 A and POMS GN 03930.020A.

An individual representative, or an entity if there is a valid assignment, may receive direct payment of the authorized fee. For information about the assignment of direct payment of fees, see POMS GN 03920.021.

B. Multiple Representatives

If a claimant appoints more than one representative in a case:

  • Fee agreement: all representatives must sign a single fee agreement unless the representative who did not sign the fee agreement waived charging and collecting a fee (see POMS GN 03940.003.D.1 and GN 03920.020). This requirement applies even when all the representatives seeking a fee have assigned direct payment of their fee to the same entity(ies).

  • Fee petition: each representative must file a separate fee petition for the services they performed. The only exceptions to this general rule are the limited circumstances described in HALLEX I-1-2-53 A (see also POMS GN 03930.020A).

C. Claimant Files for Bankruptcy

1. Background

When an individual files a bankruptcy petition with the bankruptcy court, the filing of that petition gives rise to an automatic stay. This stay generally suspends:

  • The commencement or continuation of nearly all proceedings or actions to adjudicate any claim against the property of the debtor that was or could have been commenced prior to the filing of the bankruptcy petition, and

  • Any efforts to collect on any claim against the debtor that arose prior to the filing of the bankruptcy petition.

This stay continues until the bankruptcy court grants relief from the stay, the stay expires because the bankruptcy case is closed or dismissed, or a discharge is granted.

2. Policy

a. Initial Processing of a Fee Agreement or Fee Petition After Receiving Bankruptcy Petition Notice

When SSA becomes aware that the claimant has filed for bankruptcy and has listed the representative or eligible entity as an unsecured debtor, SSA stops all actions to:

  • Adjudicate the representative's request for fees,

  • Set the amount of the representative's fee (either initially or in response to a request for administrative review from any party), or

  • Pay an authorized fee to a representative or entity from past-due benefits.

Accordingly, after SSA is notified that the claimant filed for bankruptcy and listed the representative or entity as an unsecured debtor, the decision maker may not issue a notice approving or disapproving a fee agreement. In addition, during the bankruptcy automatic stay, SSA will not authorize any new fees based on a fee agreement or fee petition or issue payment to the representative or entity.

The bankruptcy automatic stay suspends the adjudication or collection of the debt but does not automatically eliminate the debt. Therefore, for both fee agreements and fee petitions, SSA will continue to withhold the appropriate amount from past-due benefits, pursuant to section 206 of the Social Security Act, for possible future payment to a representative or eligible entity based on a valid assignment. Refer to Hearings, Appeals and Litigation Law (HALLEX) manual I-1-2-9 for information on direct payment of fees to representatives and entities. In all such cases, contact the Office of the General Counsel (OGC) at ^SSA Bankruptcy, to determine whether a motion to lift the automatic stay may be required.

b. Actions Based on Bankruptcy Court Instructions

Bankruptcy Proceeding Pending

While the bankruptcy proceeding is pending, the claimant, the representative, the entity, or SSA may ask the bankruptcy court to lift the automatic stay to allow SSA to continue withholding the appropriate amount from past-due benefits, adjudicate the amount of the fee, and/or to allow SSA to pay the fee from withheld funds.

OGC will advise on the outcome of any litigation related to the lifting of the automatic stay and what actions SSA may take while the bankruptcy case remains pending. If necessary, contact OGC at ^SSA Bankruptcy for guidance regarding whether SSA should continue to withhold past-due benefits.

Bankruptcy Outcomes

There are several possible outcomes of a bankruptcy case. SSA responds in accordance with the outcome.

  • If the outcome of the bankruptcy case is a discharge (i.e., release) of the claimant's debt to the representative (for services performed before the date the claimant filed their bankruptcy petition), the claimant has no further responsibility to the representative. SSA will release any withheld funds to the claimant and, if necessary (e.g., because of the representative's or entity's inquiry), advise the parties of the action taken pursuant to the court's order. If a fee agreement or fee petition also covers services performed after the date the bankruptcy petition was filed, contact OGC for guidance (^SSA Bankruptcy).

  • If the outcome of the bankruptcy case does not release the claimant from their obligation to the representative (such as a dismissal of the bankruptcy case without discharge), SSA will follow its normal procedures for processing the fee agreement or fee petition.

  • For any other outcome of the bankruptcy case, contact OGC for guidance (^SSA Bankruptcy).

3. Procedures

a. Bankruptcy Proceeding Pending

Fee Agreements

If the decision maker issues a fully or partially favorable determination or decision while a bankruptcy proceeding is pending, the decision maker or appropriate staff will:

  • Make a preliminary determination on the fee agreement in accordance with HALLEX I-1-2-12 (POMS GN 03940.003 contains instructions for decision makers at the initial and reconsideration levels), record the evaluation on a note for the file or draft fee agreement recommendation, and retain that evaluation in the claim(s) file.

  • Prepare a letter to the claimant, with copies to the representative(s) who signed the fee agreement, to explain that SSA cannot approve or disapprove the fee agreement until the bankruptcy court permits it to do so, and whether SSA will or will not continue to withhold past-due benefits for the payment of the fee and include a statement similar to the following:

    Because you have filed for bankruptcy and the automatic stay is in place, I have not approved or disapproved the fee agreement that specifies the fee your representative expects to charge and you expect to pay for your representative's services in connection with your claim for benefits. The Social Security Administration (SSA) may not consider this agreement or authorize a fee for your representative's services until the court permits us to do so. SSA [will/will not] continue to withhold past-due benefits for the payment of the representative fee. Please notify SSA of the outcome of the bankruptcy court action when you receive it.

    NOTE:

    As explained in HALLEX I-1-2-3C.2.b.1 in this section, if necessary, contact OGC at ^SSA Bankruptcy for guidance regarding whether SSA should continue to withhold past-due benefits.

  • Include a copy of the bankruptcy notification document, the fee agreement, and the letter to the claimant in the claim(s) file. For electronic cases, create an eView “remark” and for paper cases, attach a flag, that reads as follows:

    BANKRUPTCY PROCEEDING PENDING

    IF THE OUTCOME OF THE BANKRUPTCY CASE DOES NOT RELEASE THE CLAIMANT FROM THEIR OBLIGATION TO THE REPRESENTATIVE, PLEASE NOTIFY THE DECISION MAKER TO MAKE A DETERMINATION ON THE FEE AGREEMENT. SEND THE NOTIFICATION TO [E-MAIL ADDRESS(ES) FOR HO OR OAO CONTACT PERSON(S) OR FAX NUMBER].

  • When forwarding the claim to the PC for effectuation of the decision (refer to HALLEX I-1-2-96 for the appropriate PC control mailboxes), alert the PC about the bankruptcy proceeding by adding the following remarks or flags to the claim(s) file:

    NO ACTION TAKEN ON FEE AGREEMENT

    BANKRUPTCY PROCEEDING PENDING.

Fee Petition Anticipated or Filed

Refer to HALLEX I-1-2-1 C for guidance on informing a representative of the option to file a fee petition (POMS GN 03930.034 and GN 03930.040 contain instructions for field office (FO) and processing center (PC) staff). If the representative has not submitted a fee agreement or waived the right to charge and collect a fee by the date the decision maker issues a decision, take these additional actions when issuing the decision at the hearing or Appeals Council level:

  • Include a copy of the bankruptcy court action or SSA's notification of the action in the claim(s) file.

  • If the determination or decision is fully or partially favorable and the representative has not waived direct payment, include eView remark (for electronic cases) or flag (for paper cases) to indicate:

    BANKRUPTCY PROCEEDING PENDING.

If the representative, an entity's POC in the limited circumstances described in HALLEX I-1-2-53A (see also POMS GN 03930.020A), or an executor or other legal representative of the estate, submits a fee petition to the authorizing official while the bankruptcy proceeding is pending, respond to the representative or other individual by letter, with a copy to the claimant and any other parties to the case. The letter must state that the decision maker will not act on the petition unless they receive notification that the bankruptcy court has lifted the stay or did not release the claimant from the obligation to the representative. Use the following language:

We have received your petition requesting a fee for the services (you or the representative's name) performed for (claimant's name). The Social Security Administration has been notified that (claimant's name) has filed a bankruptcy petition. We cannot act on your fee petition until the bankruptcy court allows us to do so. Please notify this office or ask your client to notify us of the outcome of the bankruptcy court action.

Email the petition and the letter to the PC using the appropriate control mailbox in HALLEX I-1-2-96.

If the entity's POC filed the petition, and the limited circumstances described in HALLEX I-1-2-53 A (POMS GN 03930.020A) do not apply, send a letter to only the individual representative using the following language:

We have received a petition requesting a fee for services you performed for (claimant's name) from (POC's name) on behalf of (representative's name). Under our rules, we will not accept fee petitions submitted by anyone other than the individual representative except in limited circumstances. We will not take any action on a fee for these services until you submit a petition personally. Additionally, the Social Security Administration has been notified that (claimant's name) has filed a bankruptcy petition. Due to the automatic stay, we cannot act on any fee petition until the bankruptcy court allows us to do so. If you intend to submit a fee petition, please notify this office or ask your client to notify us of the outcome of the bankruptcy court action.

Include a copy of this letter in the claim(s) file. If the representative later submits a fee petition, forward it and a copy of this letter to the PC using the appropriate control mailbox in HALLEX I-1-2-96.

b. Bankruptcy Court Outcome

Fee Agreements

  1. Court Discharges Claimant's Debt to the Representative

    • Take no action on the fee agreement if the debt to the representative was for services performed before the date that the claimant filed their bankruptcy petition.

    • Email the bankruptcy outcome document to the appropriate PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

      BANKRUPTCY CASE CONCLUDED

      COURT DISCHARGED CLAIMANT'S DEBT

      TAKE NO ACTION ON THE FEE AGREEMENT

  2. Court Does Not Release the Claimant from their Obligation to the Representative

    • Approve or disapprove the fee agreement following the policy and procedures set forth in HALLEX I-1-2-12 and I-1-2-25 (POMS GN 03940.003 and GN 03940.010 contain instructions for staff at the initial and reconsideration levels).

    • Email the court's action on the bankruptcy proceeding, the fee agreement, and the order approving or disapproving the fee agreement to the control email box for the jurisdictional PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

      BANKRUPTCY PROCEEDING CONCLUDED WITH NO DISCHARGE

      (DECISION MAKER) (APPROVED/DISAPPROVED) THE FEE AGREEMENT

      FOR YOUR NECESSARY ACTION

Fee Petitions

  1. Court Discharges Claimant's Debt to the Representative or the Entity

    • Take no action on the fee petition.

    • Email the petition and the court's action to the appropriate PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

      BANKRUPTCY CASE CONCLUDED

      COURT DISCHARGED CLAIMANT'S DEBT

      TAKE NO ACTION ON THE FEE PETITION

  2. Court Does Not Release the Claimant from their Obligation to the Representative or the Entity

    • Resume processing the fee petition in accordance with the policy and procedures in HALLEX I-1-2-56 through I-1-2-59 (POMS GN 03930.000 contain instructions for staff at the initial and reconsideration levels).

    • For any other bankruptcy court outcome, contact OGC at ^SSA Bankruptcy.

      NOTE:

      If the claimant advises SSA that the representative or entity attempted to collect a fee after the bankruptcy court discharged the debt, refer the matter to the Office of the Inspector General (OIG) and OGC, following the procedures set forth in HALLEX I-1-2-81 (POMS GN 03970.017 contain instructions for staff at the initial and reconsideration levels).