TN 29 (02-03)

A. Definition of creditor

A creditor is an individual or organization who provides the beneficiary with goods or services for monetary consideration.

B. Policy

Benefits will not be certified to a payee applicant who is a creditor unless the applicant:

• is a relative of the beneficiary living in the same household, or

• is a legal guardian or legal representative, or

• is a facility that is licensed or certified as a care facility under the laws of the State or a political subdivision, or

• is administrator, owner or employee of a facility where the beneficiary lives and no alternative payee can be found, or

• is an organization where the creditor relationship is based solely on the SSA fee for payee services provision, or

• is an otherwise acceptable applicant who can show that he poses no harm to the beneficiary and that the financial relationship poses no substantial conflict of interest and no alternative payee can be found.

C. Procedure

Obtain a detailed explanation of the existing creditor relationship.

NOTE: Normally, this will occur during an initial face-to-face interview with the creditor applicant.

If the applicant, during the initial interview, did not acknowledge the creditor relationship, you may conduct a second interview. In addition to getting an explanation of the creditor relationship, determine why the creditor information was withheld. Consider the applicant's explanation for withholding this information when making the appointment decision.

1. When to appoint

If the creditor applicant satisfies any of the exceptions listed above, appoint the applicant as payee.

2. When to appoint conditionally

If you have any doubt about the intentions of the otherwise qualified creditor applicant but direct payment is prohibited and no alternative payee can be found:

• Appoint the applicant conditionally.

• Withhold any accrued or conserved benefits until you have evaluated the payee's performance unless they are needed to meet current needs.

• Establish a 3-month FO diary for a follow-up evaluation. Additional follow-ups should be done if you believe they are necessary.

• If the payee performance is unacceptable, develop for a new payee.

• If the payee performance is acceptable, develop for the release of the conserved or accrued funds.

3. When to disqualify

If the creditor relationship does not satisfy any of the conditions in GN 00502.135B., do not appoint the applicant as payee. Continue payee development and make direct payment where appropriate.

4. When to document

When the creditor applicant you appoint is the individual shown in GN 00502.135B., use the Rep Payee Applicant “Note Type” on the Make Note screen to document in eRPS, your reasons for selecting this applicant.

D. Examples

1. Creditor appointed payee

A claim is approved for a Title II beneficiary whose disability is based on a mental condition which precludes him from handling any financial matters. A person who files to be his payee accompanies the beneficiary to the field office. The beneficiary explains that he has no other family or friends that he/she is in contact with or would trust to help him with his benefits. During the interview, it is learned that the payee applicant rents a room to the beneficiary.

Since this is clearly a creditor relationship, interview the beneficiary and payee applicant and determine if the applicant can be appointed based on the last exception listed in GN 00502.135B. This determination will be based on information gathered and analyzed from the interview.

The applicant and beneficiary both state that the beneficiary has resided with the applicant for some time. The applicant has been assisting the beneficiary with his affairs, when needed, and generally is available to the beneficiary when assistance is required. The applicant charges a reasonable amount of rent for the shelter, but also says he needs this income to keep up his dwelling.

Explain to the applicant that his duties as a payee must take priority over those as a landlord and that he must make every effort to ensure the beneficiary's needs are met. The applicant's agreement to do so must be convincing.

In this instance, appoint the applicant since you are satisfied that:

• a more suitable payee is not available and

• even though a true creditor relationship exists, the payee intends to use the funds in the beneficiary's best interest.

2. Creditor appointed conditionally

Using the same example, but, after the interview you are only marginally convinced of the applicant's suitability or sincerity. Conditionally appoint the applicant as described in GN 00502.135C.2.

3. Creditor disqualified

Using the same example, but, after the interview you are convinced the applicant is only applying to be payee to ensure receipt of his rent and that he will turn the balance over to the beneficiary. Do not appoint the applicant. Continue payee development and initiate direct payment if appropriate.