Bankruptcy: Debt owed to the unemployment agency?

February 16, 2017

If you owed money to the Michigan Unemployment Agency, you might want to give my office a call.

First off, if a determination was made between Oct. 1, 2013, and Aug. 7, 2015 that you owe for back unemployment compensation, Michigan will no longer attempt to collect these alleged “over-payments,” unless the cases were individually reviewed by a human and affirmed with a new notice to the claimant. So if that is you, take a deep breath.

For all others, you can file either a Ch 7 or Ch 13 bankruptcy and one of two things will happen: (1) Michigan does nothing, and the full amount is forgiven under the Bankruptcy Code, (2) Michigan files a Complaint, and then we enter into a settlement.

But how much would the settlement be for? As you may already know, if Michigan is claiming an over-payment, they will demand that you repay them that amount, plus a x5 penalty. So if Michigan claims you were over-payed $5,000, they will also demand you pay them a $25,000 penalty, for a grand total of $30,000. If we enter into a settlement, by default Michigan will accept the original over-payment amount, plus a x1 penalty. As a result, you would owe $10,000 instead of $30,000.  And we can negotiate a manageable repayment amount, based on your circumstances.

More questions, contact me today.