Can a judgment against me for repayment of unemployment compensation be discharged in a chapter 7 bankruptcy? 15 Answers as of July 30, 2011

Can a judgment against me for repayment of unemployment compensation be discharged in a chapter 7 bankruptcy?

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Ashman Law Office
Ashman Law Office | Glen Edward Ashman
If you received unemployment and later were found to not be entitled to benefits, you can typically discharge the overpayment debt you owe. However many courts conclude you cannot stop the unemployment agency from withholding future -deserved - benefit checks until the overpayment is repaid anyway. So the injured or unemployed worker who can't work and has had to file bankruptcy is now forced to repay a debt she could not be sued for with the typically small benefits she needs to keep her family going. There are plenty of legal issues that accompany recoupment disputes. But the important lesson is this: If you wipe out overpayment benefits in bankruptcy, you may or may not have really wiped it out.
Answer Applies to: Georgia
Replied: 7/15/2011
Financial Relief Law Center
Financial Relief Law Center | Mark Alonso
Debts not dischargeable in chapter 7 bankruptcy include domestic support actions, debts owed to a spouse, certain tax debts, debts as a result from fraud, DWI/ DUI, student loans (absent a finding of undue hardship), and any fines, penalties or restitution that a federal, state, or local government has imposed to punish you for a violation of law. I'm not sure if your judgment is due to an overpayment mistake or if there was a finding of violation of law or fraud. The answer to that will decide whether or not the debt is dischargeable in bankruptcy.
Answer Applies to: California
Replied: 7/15/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
Peobably not.
Answer Applies to: California
Replied: 7/15/2011
Law Office of J. Thomas Black, P.C.
Law Office of J. Thomas Black, P.C. | J. Thomas Black
Yes, a claim against you for an overpayment of unemployment compensation can be discharged in a chapter 7 bankruptcy. That being said, if you misrepresented your employment status to the state agency that administers the unemployment compensation program, it is possible that the state agency involved could file an Adversary Proceeding in your bankruptcy case, claiming that you defrauded them, and asking the Bankruptcy Court to declare that the debt is non-dischargeable. If that happened, and they won in bankruptcy court, then the overpayment would not be discharged and you would still owe it after the bankruptcy. In 29 years of bankruptcy practice in the Houston Texas area I've never had our state unemployment agency do that, but we recently had the Social Security Administration file such an Adversary Proceeding , trying to have a lady's Social Security disability overpayments declared to be non-dischargeable. We are opposing them in that case, and it is still going on.
Answer Applies to: Texas
Replied: 7/15/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
Yes but if there is an allegation of fraud then EDD can file a lawsuit in bankruptcy called an adversary proceeding to have the bankruptcy court determine that the overpayment was because of fraud and not dischargeable,
Answer Applies to: California
Replied: 7/15/2011
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