Posted on Dec 26, 2014

I can't tell you the number of people that we have represented over the years that have had benefit overpayments, including Social Security overpayments but particularly unemployment or Texas Workforce Commission unemployment benefit overpayments, that we have successfully discharged in bankruptcy. I can't tell you the number, but there have been a lot of people over the years that we have helped.

Now, they really are taking a tough stance, and have started prosecuting people for felony theft that have received T.W.C. benefit overpayments. 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 criminal court-ordered restitution is not discharged, or even if it could be, paying restitution is often a condition of probation. Don't pay, and you go to jail. So if your most worrisome or biggest debt 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.

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.

Read More About Overpaid for unemployment benefits in Texas? You can be prosecuted for felony theft....

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization