Do You Have to Pay Back Unemployment Benefits?
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If you lose your job through no fault of your own, you may be entitled to unemployment benefits. Unemployment is designed to give you temporary income to cover your bills while you're looking for work. Generally, you're not required to pay back any of the money you receive unless it's determined that you were paid benefits that you weren't entitled to. If you receive an overpayment notice, you need to understand what your rights are.
Overpayment of unemployment benefits is typically categorized as fraudulent or non-fraudulent, depending on the circumstances. Generally, if you received benefits that you were not entitled to through no fault of your own, it's considered non-fraud. For example, you receive more benefits than you're entitled to because the unemployment agency miscalculated your benefit amount or your employer reported incorrect wage information. Whether or not you'll have to repay the money is determined by your state unemployment commission. Some states, such as Washington, may waive the overpayment in certain situations. If the overpayment is waived, you won't be held responsible for paying the benefits back.
Fraudulent overpayments occur when you withhold information or give false information to receive benefits. Examples of fraud include not reporting any income you earn while on unemployment or lying on your application for benefits. If it's determined that you committed fraud to get unemployment, you'll have to pay the money back and you could be subject to criminal prosecution. Some states, such as California, also impose a penalty for fraudulent overpayments and you may be barred from receiving additional unemployment benefits. Generally, waivers are not allowed in cases where the overpayment is the result of fraud.
If you believe that an overpayment is not your fault, you have the right to appeal. The amount of time you have to appeal depends on the state that paid your benefits. In New Jersey, for example, you only have 10 days from the date your determination letter was mailed to file an appeal. Appeal hearings can take place in person or over the phone. You should continue to file your weekly claim for benefits pending the outcome of the hearing. Depending on the state you live in, you may be able to file for additional appeals if your initial appeal is denied.
Ignoring an overpayment notice won't make it go away. Because the money is owed to a government entity, you can't get rid of the debt by filing bankruptcy. If you don't make an effort to appeal the decision or set up a payment plan, you could be subject to collection actions. For example, your federal or state income tax refund could be seized or your bank account could be levied. Some states may also recoup overpayments through wage garnishment. If you apply for unemployment benefits in the future, any amount you're eligible to receive could be offset by what you still owe.
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Rebecca Lake is a freelance writer and virtual assistant living in the southeast. She has been writing professionally since 2009 for various websites. Lake received her master's degree in criminal justice from Charleston Southern University.