Bankruptcy and Claims 430-05-80-65

(Revised 01/01/04 ML2893)

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When a worker has been notified that a household has filed for bankruptcy, collection action must stop for all claims, pending the outcome of the court proceedings. The prohibition on collection action includes recoupment.

 

Although administrative and inadvertent error claims are not dischargeable in bankruptcy, a worker must not assume that this is always the case and must defer to the court's determination. A worker must resume or initiate collection after and in conformance with the final court action.

 

When there is a determination of fraud involving an overissuance, the claim is not dischargable by filing for bankruptcy regardless of the court order. A worker must resume collection after final court action.

 

A copy of the Notice of Bankruptcy, Meeting of Creditors, and Deadlines and the Discharge of Debtor must be sent to the State Office.