Unemployment Overpayments

If the California Unemployment Development Department has contacted you regarding unemployment overpayments that you received in excess of your entitlement and cannot afford to pay back, you may want to consider filing for bankruptcy relief.   Most people are surprised to learn that you can file bankruptcy on the excess overpayments.  In most cases, overpayments are treated just like credit card debt in your case filing.  The only exception would be if you obtain an unemployment overpayment through fraud.  If that is the case, then you may be denied bankruptcy relief on the ground of fraud, as opposed to the mere fact that you could not afford to receive unemployment benefits.

Can I File Bankruptcy on Unemployment Overpayments in San Diego?

If you receive excess overpayments from the California Unemployment Development Department (EDD) and don’t return the extra payments to the EDD, at some point the EDD will ask for the money back.  What do you do then?  As long as you received unemployment benefits through no fault of your own, you can file bankruptcy on the overpayments.  But if you lied or committed fraud in order to obtain the overpayments that you were not entitled to, then you may be denied relief on the ground of having committed fraud.

Reason for Overpayments

Most people who receive overpayments from the EDD keep the extra cash, either because they don’t realize it is an overpayment, or because they just need the money to survive and do it out of financial necessity.  Most people do not engage in fraud in an effort to obtain unemployment benefits.   They spend the money to pay their rent or mortgage, to feed their family, to pay for transportation and gas, and to put food on the table.  There is nothing fraudulent about spending overpayments on necessities as long as you did not do anything wrong to get the unemployment benefits. Simply spending overpayments is not fraud, even though you were not rightfully entitled to receive them.

Benefits Obtained Through Fraud

To establish fraud as a grounds for denying a discharge of unemployment overpayments, it must be shown that, at the time that you received the unemployment overpayment you had a fraudulent intention.  For example, if you were working and told the EDD that you were not working in order to receive benefits, that would be a false statement made to induce payment of unemployment benefits and would constitute fraud.  But if you simply received the unemployment benefits through no fault of your own (because the EDD made a mistake entirely on its own), then there is no fraud and you can file bankruptcy on the excess overpayments.

Talk to a Lawyer

If you have received unemployment benefits and have been contacted by the EDD to return the funds, contact a San Diego bankruptcy lawyer today to find out whether you will be able to file on the unemployment overpayments.  We have helped many clients successfully eliminate unemployment overpayments of $10,000 or more.