HRDC Demanding Repayment Despite Bankruptcy

Question: When I filed for bankruptcy in 2009, I owed HRSDC over $20,000 in EI overpayments (including interest). This was included in my list of debtors when I filed. I had been repaying the debt with automatic payments of $200 per month. Once I filed for bankruptcy, the withdrawals stopped and, like all the other companies involved in my bankruptcy, HRSDC did not contact me in any way afterwards….until last week. Now they are demanding payment. Please advise!

Answer: Your situation is not unusual.  There are two possible explanations for what has happened:

First, the government did not enter your bankruptcy correctly in their computer system, and someone at the government realized you stopped paying, so now they are pursuing you for it.

Second, debts that arise as a result of fraud are not automatically discharged in a bankruptcy.  The government may have decided that a $20,000 EI overpayment was fraud (ie. you claimed EI when you knew you were not eligible), and therefore the debt was not dischargeable.

In either case, you should discuss this with your trustee.  Start by asking your trustee to send you a copy of the proof of claim filed by the HRDC; there may be a note on the claim indicating that the claim is not dischargeable.

Your trustee can then provide you with further recommendations, including having you make an application to bankruptcy court to discharge the debt, if the court agrees.