Are Unemployment Overpayments Dischargeable in Bankruptcy?


Unemployment overpayments must be repaid to the government, but you can sometimes discharge this debt in bankruptcy.

If you have recently lost your job and have been receiving unemployment benefits, you may be wondering if the overpayments you received can be discharged in bankruptcy. This is a common question that many people have, and the answer is not always straightforward.

We’ll provide you with the information you need to know about unemployment overpayments and when they can be discharged in bankruptcy.

What Are Unemployment Overpayments?

Unemployment overpayments occur when you receive more money in unemployment benefits than you are entitled to. This can happen for a variety of reasons, such as a mistake on your application, a change in your circumstances, or a delay in processing your claim.

If you receive an overpayment, you are required to pay it back to the government.

Can Bankruptcy Discharge Unemployment Overpayments?

The answer to this question depends on the type of bankruptcy you file. In Chapter 7 bankruptcy, unemployment overpayments are generally considered dischargeable debts. This means that you can eliminate your obligation to pay them back by filing for bankruptcy. There are some exceptions to this rule, such as if the overpayment was due to fraud or willful misrepresentation.

In Chapter 13 bankruptcy, however, unemployment overpayments are treated as priority debts. This means that you will be required to pay them back in full through your repayment plan. That said, you may be able to negotiate a payment plan with the government that is more manageable for you.

What Should You Do if You Owe Unemployment Overpayments?

If you owe unemployment overpayments, it is important to act as soon as possible. Ignoring the debt will only make the situation worse.

Here are some steps you can take:

  • Contact your state's unemployment office and ask about repayment options. They may be able to set up a payment plan or negotiate a settlement.
  • Consider filing for bankruptcy. If you are struggling with overwhelming debt, bankruptcy may be a viable option for you. A bankruptcy attorney can help you determine if you qualify and guide you through the process.
  • Seek the advice of a financial counselor. They can help you create a budget and develop a plan to pay off your debts.


Unemployment overpayments can be a source of stress and anxiety for many people, but there are options available to you.

If you are considering bankruptcy or need help managing your debt, contact Buchalter & Pelphrey Attorneys At Law. Our experienced bankruptcy attorneys can help you navigate the complex legal system and get back on track financially.

Contact us today to learn more.

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