Q: I owe the state of Florida Department of children and family an overpayment. Will filing Bankruptcy wipe out the debt?
I'm a disabled widow and live in Raymond, NH. Back in 1993 i received foodstamps and medicaid for my 4 minor children in Fla., 2yrs ago they took 200.00 out of my check. I set up a pymt. plan immediately for 10.00 monthly. I missed a couple pymts. lately and they took another 200.00 out this month and said it will be 200.00 per month from now on (called a Levy) and that i can't get another payment plan. I can't afford that and would like to know if bankruptcy is my best option now. Thank you so much for your time. Valerie
A: I believe it is likely that this debt can be discharged by filing a bankruptcy petition unless the creditor can show fraud or misrepresentation under Section 523 of the Bankruptcy Code. Certain government benefits over payment, such as workers compensation or unemployment benefits, can be discharged by filing for bankruptcy protection because there is no specific provision for excepting them from discharge in Section 523. However, courts have ruled that such agencies can apply the principle of "recoupment" for over payments discharged in bankruptcy which means that if the debtor ever seeks to avail himself or herself of that benefit again, the agency can recoup the amount discharged by applying the new benefit to the amount "credited" and not actually pay any new benefit until the old amount is accounted for. However, the agency is prevented from taking any other actions to collect the discharged obligation. From your initial question, it sounds to me like it probably falls into this category.
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