We have represented quite a number of people over the years that have had benefit overpayments, including Social Security overpayments but particularly unemployment or Texas Workforce Commission unemployment benefit overpayments. Almost all of them had their debts discharged in bankruptcy, without a problem.
But these days, the state and federal governments are really are taking a tough stance, and have started prosecuting people, at least where the person intentionally cheated the government.
For example we have seen felony theft prosecutions against people that have received T.W.C. benefit overpayments that they were not entitled to, and they didn't report that they were back to work. Some of the prosecutions are brought in state court, some in federal court using mail fraud or other federal law violations.
TWC unemployment or other benefit overpayments would usually be a dischargeable debt in a bankruptcy case, unless the creditor objected within a certain time frame. But criminal prosecutions are not "stayed" by the automatic stay that goes into effect when you file a bankruptcy case.
And court-ordered restitution by a criminal court is not discharged in bankruptcy. Even if it could be, paying restitution is often a condition of you getting probation. So if you don't pay, you go to jail. So if your most worrisome or biggest debt problem is a benefit overpayment and it was not the result of an innocent mistake or the government's mistake, filing bankruptcy may not solve your problem.
But on the other hand, if a bankruptcy can get rid of the rest of your debts, you may be able to repay the benefit overpayment quickly, before it turns into a criminal prosecution. If you want to meet with one of our attorneys to discuss your debt problems and how to deal with them, and you live in the Houston, Texas area or surrounding counties, give our office a call at 713-772-8037.
Do you think this is fair? Should people be prosecuted for receiving too much in unemployment? Has this ever happened to you or anyone that you know? Your comments or questions are welcome!