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Discharge of Overpayment of Unemployment Benefits in a CH 13
I have two cases, same issue, with a twist on each. Client one colelcted EDD unemployment benefits while he had a job. EDD wants $6K overpayment back. Client one knew he was doing this and hoped not to get caught.
Client two collected SSDI benefits while he was working, SSDI recently sent him a bill for $35K for overpayments of SSDI. Client two was told that he could collect SSDI and be employed as long as employment income did not reach a certain threshold, and he honestly but mistakenly believed that his employment income was below that threshold for 3-4 years.
Both clients need chapter 13 not 7 for other reasons.
I know, and have told each they could face a section 523(a)(1)(A) non-discharge case through section 1328. Ignore that for my purposes.
Focusing instead on section 523(a)(7) issue:
1. Are these overpayments for a "fine, penalty or forfieture" to a government agency?
2. If so, can they be categorized as "compensation for actual pecuniary loss" and thus not part of the discharge exception;and
3. Since we are in Chapter 13, and per section 1328(a)(2) these are included in what remains of the "super discharge" as we fondly call it in any event?
I'm sure someone out there has dealt with these benefit overpayment claims. Please let me know if I should expect any surprises. Thanks
Jeff Smith
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