Can NYS Department of Labor unemployment overpayments be discharged in Chapter 7 bankruptcy?
I'm facing a really tough situation and need some advice. I received an overpayment notice from NYS Department of Labor for $4,800 from benefits I received in 2023. At the time I was honestly reporting my part-time work hours but apparently there was some issue with how they calculated my weekly benefit amount. Now I'm drowning in other debt and considering filing Chapter 7 bankruptcy. Does anyone know if unemployment overpayments to NYS Department of Labor can be included and discharged in a Chapter 7 filing? I've heard conflicting information and can't afford a bankruptcy attorney right now to get a clear answer.
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Mia Green
This is actually a complex area of bankruptcy law. Generally speaking, unemployment overpayments CAN be discharged in Chapter 7 bankruptcy, but there are some important exceptions. If the NYS Department of Labor can prove the overpayment was due to fraud or intentional misrepresentation, then it would not be dischargeable. However, if it was an honest mistake or administrative error on either your part or theirs, it should be dischargeable. You'll want to gather all documentation showing you reported your earnings correctly.
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Sophia Rodriguez
AuthorThank you for this information! I definitely reported everything correctly on my weekly claims. The issue seems to be that NYS Department of Labor miscalculated my base period wages initially and gave me a higher weekly benefit amount than I was entitled to. I have all my pay stubs and the weekly claim confirmations showing I reported my part-time earnings.
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Emma Bianchi
You should also check if you can appeal the overpayment determination before going the bankruptcy route. Sometimes NYS Department of Labor makes calculation errors and you can get the overpayment reduced or eliminated entirely through the appeals process. The deadline to appeal is usually 30 days from the notice date, but they sometimes accept late appeals if you have good cause.
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Sophia Rodriguez
AuthorThe overpayment notice is from 6 months ago and I tried calling NYS Department of Labor multiple times but could never get through to anyone who could explain it properly. At this point I think the appeal window has closed.
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Lucas Kowalski
Actually, if you're considering bankruptcy anyway, you might want to try Claimyr (claimyr.com) to get through to an actual NYS Department of Labor agent. They help people reach unemployment agents by phone when the regular lines are jammed. I used them last year when I had a similar issue and finally got someone who could review my case properly. There's a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Might be worth trying before filing bankruptcy since that has long-term credit implications.
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Olivia Martinez
omg this exact thing happened to my cousin! she included the unemployment overpayment in her chapter 7 and it got discharged no problem. BUT she had to prove she didnt commit fraud which meant gathering like every piece of paperwork from when she was on UI
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Sophia Rodriguez
AuthorThat's encouraging to hear! Do you know what specific paperwork she needed to provide? I want to make sure I have everything ready if I go this route.
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Charlie Yang
I hate to be the bearer of bad news, but even if the overpayment gets discharged in bankruptcy, NYS Department of Labor might still try to collect it by offsetting any future unemployment benefits you receive. They have the right to intercept your benefits even after a bankruptcy discharge for overpayments. This is something a lot of people don't realize until they try to file for unemployment again years later.
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Mia Green
This is partially correct but needs clarification. While it's true that NYS Department of Labor can offset future benefits, they cannot do this if the debt was properly discharged in bankruptcy AND you can prove the discharge. The problem is many people don't properly notify NYS Department of Labor of the bankruptcy discharge, so the agency continues trying to collect.
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Grace Patel
ugh the whole unemployment overpayment system is such a nightmare!! they make mistakes all the time and then expect US to pay for THEIR errors. i hope you can get this sorted out one way or another. the stress is probably killing you
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Sophia Rodriguez
AuthorThanks for the sympathy! It really has been incredibly stressful. Between this overpayment and my other debts I'm barely keeping my head above water.
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Aisha Mahmood
I went through something similar a few years ago and wanted to share what I learned. First, definitely gather ALL your documentation - pay stubs, weekly claim forms, any correspondence with NYS DOL. Second, you might want to contact a legal aid society in your area - many offer free bankruptcy consultations even if you can't afford a private attorney. The NYC Bar Association has a pro bono program, and there are similar programs throughout NY state. Also, before filing bankruptcy, consider requesting a waiver of the overpayment from NYS DOL if you can show financial hardship - they sometimes grant these, especially if the overpayment wasn't due to fraud. The worst they can say is no, and it might save you from having to file bankruptcy at all.
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