Legal Question in Bankruptcy in North Carolina

It is almost always worthwhile to call and consult a lawyer to secure answers to serious questions. If the amount is small, then a posting such as this may give insight to readers, but cannot be the basis of determining whether or not to file bankruptcy, file a proof of claim, file an adversary proceeding or other actions with consequences. If there is a judgment, a court has ruled on the nature of the debt. Generally speaking, Generally, recoupment of pre-petition overpayments of benefits from post-petition benefits arising from the same transaction does not violate the automatic stay if recoupment is provided for by state law. "`Recoupment and setoff rights are determined by nonbankruptcy law, which ordinarily is state law.'The reasoning of the courts is that recoupment is not subject to the stay because the debtor has no interest in the funds against which recoupment is allowable and they are not considered property of the estate. Of course, if benefits were obtained by fraud, then the taxing authority could cause any repayment debt to be nondischargable under a separate provision.

From the employer's perspective the Bankruptcy code exempts from discharge taxes and assessments owed to state taxing authorities. Some penalties and interest may be dischargable in a Chapter 13.

All the details and circumstances must be known before a definitive opinion could be given in such a case.