Can NYS Department of Labor unemployment overpayments be discharged in Chapter 7 bankruptcy?

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.

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.

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

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.

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

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.

I'm dealing with a similar situation right now and have been researching this extensively. From what I've found, unemployment overpayments to NYS DOL are generally dischargeable in Chapter 7 bankruptcy UNLESS they can prove fraud or willful misrepresentation. Since you mentioned you were honestly reporting your hours and it seems like their calculation error, you should be in good shape. However, I'd strongly recommend trying a few things first: 1) File a late appeal explaining you couldn't get through to anyone - NYS DOL sometimes accepts these with good cause, 2) Request an overpayment waiver due to financial hardship (form IA 765.1), and 3) if you do file bankruptcy, make sure to list NYS DOL as a creditor and send them a copy of your discharge papers afterward to prevent future benefit offsets. The bankruptcy will stay on your credit for 7-10 years, so it's worth exhausting other options first. Also, definitely keep all your documentation showing you reported earnings correctly - that's your best defense against any fraud allegations.