Are Overpayments of Unemployment Benefits Dischargeable in Bankruptcy?
Yes, overpayments of unemployment benefits are dischargeable in bankruptcy. If this occurs and the overpayment it is not due to fraud or you collecting benefits when you were not eligible, than it is dischargeable in bankruptcy. Call us toll free at 1-877-963-9543 to schedule a FREE PHONE CONSULTATION or FREE OFFICE CONSULTATION to find out is bankruptcy is right for you.
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This is one of the most unfortunate ways a person can become burdened with unmanageable debt. You were laid off from a job, fired or otherwise qualify to receive unemployment benefits. You receive the benefits for eighteen months and then find a job that pays okay and you stop receiving the benefits. Five months later you receive a letter from the Employment Development Department saying “Oops, we made a mistake and gave you too much money each check and you now owe us $10,000, please write us a check as soon as possible.” What?!! This happens far too often.
There are two different scenarios. This first is you receive the EDD bill and you are still receiving benefits. If this is the case then the EDD will most likely reduce the amount of your monthly benefit until they have recouped the amount they claim you owe them. Depending upon how much longer you are eligible to receive benefits you may pay off the debt owed to the EDD.
The other scenario is when you have found a job and no longer receiving benefits and receive a bill from the EDD. In this case there is no chance for the EDD to recoup the money and must seek collection from you directly. There is an administrative process to determine if you owe the money if you dispute the amount they claim is owed. There will be extra fees included to the total owed the longer you wait to pay it off.
Again, this is a dischargeable debt in bankruptcy. The debt owed to the EDD will be treated as a general unsecured debt and discharged just like a credit card or medical bill in a chapter 7 bankruptcy case.
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