What Should I Do About My Unemployment Overage?

Unemployment benefits were a welcome relief for many Arkansans during the COVID-19 pandemic. However, it is possible to have an overage of unemployment compensation.

If you applied and were approved for unemployment benefits, but collected too much, that’s an overage. Some overages are caused by:

• Fraud
• An error on your part
• A mistake by your former employer
• A miscalculation by the state unemployment board

Federal Covid Relief for Workers

Unemployment benefits are compensation available to former employees who are out of work through no fault of their own. You must earn enough over a given period, and your employer must pay into the system. You need to be available for work and be actively seeking another job.

Thanks to the Pandemic Unemployment Assistance, a federal program under the Coronavirus Aid, Relief, and Economic Security Act of 2020, many individuals could get financial relief. These individuals include:

• The self-employed who are out of work
• People who don’t have enough of a work history to qualify for benefits usually
• Those who have exhausted benefits in the past

If You’re Paid Too Much, Contact the State

If you discover you’re receiving too much unemployment pay or other discrepancies in these benefits, inform the Arkansas Division of Workforce Services in writing, either through an email or by postal mail – keep a copy – explaining the situation. It’s essential to have a copy of this communication if the state accuses you of fraud. It’s evidence you’re acting in good faith, you’re trying to do the right thing, and you didn’t take this money intentionally.

Whatever you think the overage is, set it aside. It may take the state a while to get back to you. If you’re still collecting benefits, they may reduce future benefits to make up for the overage. If you’re not collecting, they may ask for their money back and set up a payment plan.

If UEI Benefits Aren’t Enough, Bankruptcy May Be an Option

If you are having trouble paying your rent and other bills despite receiving federal Covid unemployment relief, bankruptcy may be an option. You can seek financial protection under federal and state law. Depending on the circumstances, your debts may be forgiven or reduced.

Bankruptcy allows you to enjoy a fresh financial start. You may also manage what you owe through a court-approved payment plan.

Is Bankruptcy Right for You?

Signs that bankruptcy’s worth considering include:

• You’re deep in debt
• Your wages are garnished to pay a debt
• You can’t afford minimum monthly payments
• Most of your debts are unsecured (your property is not collateral)
• You’ve defaulted on paying what you owe
• You may lose your home or risk eviction because of foreclosure, or your vehicle may be repossessed
• You do not see your situation improving any time soon

Bankruptcy and Unemployment Benefit Overages

You may not be able to include unemployment benefit overages among forgivable debts if you declare bankruptcy. Two of these debts could be your overage and collection fees, which could be dischargeable – the bankruptcy court decides you need not pay the debt – unless the state sues you for fraud. It could ask the bankruptcy court to force you to pay them because you got benefits illegally.

The state might want you to pay penalties if you received an overage. If you’re seeking protection under Chapter 7 bankruptcy – with some exceptions, your property would be sold to pay your debts – the penalties would not be dischargeable. If you filed for Chapter 13 – you pay your debts on a schedule, with some debts discharged – they would be dischargeable.

Protection for Forgiven Debts

Suppose a bankruptcy judge discharges you from the overage debt, penalties, and collection fees from unemployment benefits. In that case, the state can’t try to collect these fees again. The bankruptcy order would cut off whatever rights the state had to seek that money.

Get the Legal Help You Need

If you have an overage of unemployment benefits and at the same time are thinking about bankruptcy, call The Law Group of Northwest Arkansas PLLC. We can answer your questions about unemployment benefits and bankruptcy. If you are eligible for bankruptcy and in your best interests, we can get you started and represent you during the process.

Call us at (479) 316-3760 or reach out through our online contact form to request a free consultation.