Can California EDD unemployment overpayments be included in Chapter 7 bankruptcy?

The notice says 'overpayment due to unreported wages' but doesn't use the word fraud anywhere. Does that matter? Like does that specific phrasing help my case for discharge?

Yes, that actually matters quite a bit. 'Unreported wages' without explicit fraud language often signals an administrative or reporting error determination rather than intentional fraud. That's a more favorable position for potential discharge. Still show your attorney the exact notice word for word though.

same thing happened to me - got hit with overpayment said unreported wages, my bankruptcy atty said it was dischargeable as unsecured debt. ended up included in my ch7. so it can definitely work out

That's so reassuring to hear an actual real experience. Did EDD show up to object at your bankruptcy hearing or anything like that?

Nope, they didn't show up or file any objection. Lot of times these agencies just don't respond to individual bankruptcies. My attorney said it happens more often than you'd think with EDD specifically.

wait so EDD just like... lets it go? that seems too easy i feel like thered be consequences

I mean they're listed as a creditor just like anyone else. They have the right to object but many times they don't. The discharge is the discharge.

I didn't even know waiver was an option still available to me after losing the appeal. Is that actually still on the table?

Yes! Waiver and appeal are two separate things. You can lose your appeal on the merits of whether you were overpaid and still separately request a waiver if repayment would cause financial hardship. They're evaluated differently. Definitely ask EDD directly about this.

seconding the Claimyr suggestion - i used it to sort out my own overpayment notice situation. got through to someone in like 20 mins when i'd been trying for two weeks on my own. the agent actually pulled up my account and explained everything in detail

Good question. Once a debt is discharged in Chapter 7 the creditor - including government agencies like EDD - cannot legally attempt to collect it. That means no wage garnishment, no tax refund intercepts, no collections. The automatic stay kicks in when you file and the discharge makes that permanent for eligible debts.

ohhhh ok that makes way more sense. so the discharge actually stops the tax refund thing too? because i heard EDD can intercept state tax refunds

Correct. EDD does have the ability to intercept state tax refunds for unpaid overpayments through the FTB intercept program. But a bankruptcy discharge legally ends that ability for the discharged debt. Your bankruptcy attorney can advise on timing if you have a refund coming.

That's kind of terrifying honestly. I have all my pay stubs and earnings documentation from that period. Should I bring all of that to my attorney?

Absolutely yes. Full documentation. Don't let your attorney file blind. Give them everything - weekly certification records, pay stubs, any correspondence with EDD, the appeal decision, all of it. The more transparent you are with your attorney the better they can protect you.

this is really good advice. i think a lot of people go into bankruptcy without organizing their EDD paperwork and then get surprised when questions come up

Yes, EDD is listed as a creditor in your bankruptcy schedules just like any other creditor. You list their contact address, the debt amount, and the nature of the debt (government overpayment). Your bankruptcy attorney handles the actual form completion. EDD gets the same notification any other creditor gets when the automatic stay goes into effect.

ok that's way less complicated than i imagined. i thought government debts had some totally different special filing process

Nope, same process. The difference is just in whether they can be discharged at the end, which comes down to the fraud vs non-fraud thing everyone's been talking about.

Wait seriously the whole thing can be waived? I thought waiver was only partial. Can you tell me more about this process?

Yes the full amount can potentially be waived. The DE 1446 asks about your monthly income, expenses, assets, and basically whether paying this back would make it impossible to cover basic living expenses. If EDD agrees the hardship is real they can waive all or part of it. I'd try this before chapter 7 honestly because bankruptcy has years of credit implications.

This is a great point. I mentioned the waiver option earlier too. Claimyr helped me get an EDD agent on the phone who specifically walked me through the DE 1446 waiver - sometimes hearing the process explained verbally by an agent makes it way clearer than reading the forms alone. claimyr.com if you want to try getting someone on the phone.

I genuinely didn't know this form existed. I'm going to look into it today. Thank you.

There was no criminal anything in my case, just the administrative overpayment notice. So I'm in the better category for this?

Yes, administrative-only with no fraud language explicitly stated is your best scenario for potential discharge. Still consult your attorney but you're not in the worst situation here.

wait EDD can actually pursue criminal charges for overpayments?? i had no idea it could go that far

In cases of clear intentional fraud yes, but it's typically reserved for large amounts and blatant misrepresentation. Random paperwork errors or reporting mistakes almost never go that route. It sounds like your situation OP is definitely not in that territory.

4 months start to finish sounds manageable. Did you have to pay an attorney or did you do it yourself?

paid an attorney, was worth every dollar. tried to read up on doing it myself and the paperwork is genuinely complicated especially when you have government creditors mixed in with regular debt

yeah i've heard people try to do bankruptcy pro se and it can go really badly. the attorney fee is an investment for sure

I haven't seen any documented policy from EDD that specifically flags SSNs associated with bankruptcy discharges for future claim purposes. Adjudication delays happen for many reasons. I'd be cautious about attributing future delays to the bankruptcy without evidence. That said it's not an unreasonable thing to ask your attorney about.

fair enough, probably just anecdotal stuff I've picked up. wanted to throw it out there since it seemed relevant

I think this is mostly urban legend territory. EDD adjudication delays are so common across the board that attributing them specifically to prior bankruptcy seems like correlation not causation.

Not a dumb question. The dischargeability rules don't change based on dollar amount - the fraud/non-fraud classification is still the key factor regardless of whether it's $1,800 or $18,000. However practically speaking, EDD is less likely to expend resources actively contesting a smaller bankruptcy discharge. So smaller amounts may actually sail through more easily from a practical standpoint.

That makes a lot of sense actually. Lower amount, less motivation for them to fight it. Thanks for explaining.

mine is about 2400 and i was also wondering this. good to know the rules are the same

I hear you, the EDD phone situation is genuinely awful. I've mentioned it earlier in this thread but Claimyr (claimyr.com) was what finally got me through to an actual EDD agent who could access my account and help. Check the video demo at https://youtu.be/JmuwXR7HA10 - after 14 months of trying you deserve to actually talk to a real person who can look at your file.

I've heard of Claimyr before but was skeptical. At this point I'm willing to try literally anything. Going to check it out today.

same, the phone situation with EDD is why so many people just end up in bankruptcy honestly. if you could actually reach a person and get real answers maybe more people would work it out directly

Exactly. I'm not opposed to paying back what I owe if we can work out something reasonable. I just can't get anyone on the phone to have that conversation.

Generally speaking yes - in Chapter 7 bankruptcy, unsecured debt discharge covers the full balance including accrued interest and administrative penalties, not just the original principal. So if EDD has added penalties on top of your $3,200 overpayment the entire $4,500 current balance would be what's listed in the bankruptcy schedules and what would potentially be discharged.

Oh wow that's actually huge. The penalties were making me feel like it would never stop growing. Good to know the discharge would cover the whole thing.

Just to be complete here - make sure your bankruptcy attorney lists the full current balance on the schedules, not just the original overpayment amount. Get the most recent EDD correspondence showing the total amount owed before you file.

This is the best possible outcome from a thread like this. Try the waiver first, have the backup plan ready. Really glad the DE 1446 option came up because a lot of people don't know it exists.

So glad you're trying the waiver first! Fingers crossed for you. The hardship documentation is key - make your financial picture very clear in the forms.

Perfect approach. Waiver attempt costs you nothing but time, and if denied you have the bankruptcy path clearly viable. Good luck - come back and update us on how the waiver goes.

Following this for when I have to deal with my own $11k situation. Please do come back and update!

This is incredibly helpful, thank you. Did you have to interview with anyone or was it all paperwork?

All paperwork in my case, no interview. Submitted the DE 1446 with supporting docs by certified mail. Got a decision letter about 8 weeks later. No phone calls required though I did try to call and check status midway through (couldn't get through, surprise surprise).

8 weeks for a decision seems reasonable honestly for government stuff. less than I expected

Yes, absolutely tell your Chapter 13 trustee immediately. A new debt arising after you filed Chapter 13 is a significant development for your case. Depending on timing and your specific plan structure, you may need to amend your plan. This is not something to sit on - call your bankruptcy attorney today if you have one.

Oh wow okay yes calling my attorney right now. I had no idea this was that urgent. Thank you.

This is really different from the original post scenario so definitely get proper legal advice specific to your Chapter 13 situation. The rules for Ch13 and newly discovered creditors are more complex than what's been discussed in this thread about Ch7.

No - the automatic stay takes effect the MOMENT you file for bankruptcy, not when the discharge is granted. From the second you file, EDD and all other creditors are legally prohibited from any collection actions including wage garnishment, bank levies, tax refund intercepts, and calls. The stay is one of the most powerful immediate protections bankruptcy provides.

oh that's actually amazing to know. so filing itself stops everything right away even before the whole process is done

and does that include if they already started garnishing before you filed? does it stop mid-garnishment?

Yes, an active garnishment must stop upon filing. If wages are garnished after your filing date that's a violation of the automatic stay and your attorney can take action. Even wages garnished shortly before filing can sometimes be recovered depending on the lookback period - another thing to discuss with your attorney.

This is a good point - I don't have any open claims right now but I'm going to make sure I tell my attorney about my full EDD history when we meet again.

Good call. Full disclosure to your attorney is always the right move. They can only protect you from what they know about.

Yeah this is underrated advice. People sometimes compartmentalize their legal problems and their attorney ends up surprised by stuff that could have been handled upfront.