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BENEFIT RECOVERY BANKRUPTCY
4040 - BANKRUPTCY
REQUIREMENT Households with certain Food Stamp and TANF claims may petition
for relief under bankruptcy proceedings. The county DFCS office
acts on behalf of the Federal Food Stamp and TANF agencies in
these proceedings.
BASIC
CONSIDERATIONS Cases in which the AU seeks debt relief through the bankruptcy
courts are handled by strict guidelines.
Any claim established after a bankruptcy is filed must also be
suspended from collection until the original bankruptcy is dismissed
or discharged. If the order is not amended to include the subsequent
claim, resume collection after the bankruptcy is processed.
Use Chart 4040.1, Bankruptcy Chart, to process claims associated
with a bankruptcy action.
VOLUME IV - BENEFIT RECOVERY MT-7 - 10/08 PAGE 4040-1
BENEFIT RECOVERY BANKRUPTCY
CHART 4040.1 – BANKRUPTCY CHART
Claim Type Chapter 7 Chapter 13
Agency Error Upon notification, suspend. Leave in Suspend, file proof of claim, post
(Code U) suspense until the order of discharge any payments received during
is received if it is a no assets case. If protection, terminate balance at end
assets, submit proof of claim when of protection, when debtor receives
notified by Trustee. Post any funds discharge.If bankruptcy is dismissed,
distributed to county. Terminate and resume collection.
write off balance after distribution is
complete and county receives or
obtains notification. If bankruptcy is
dismissed, resume collection.
Client Error Upon notification, suspend. Leave in Suspend, file proof of claim, post
(Codes C, S) suspense until the order of discharge any payments received during
is received if it is a no assets case. If protection, terminate balance at end
assets, submit proof of claim when of protection, when debtor receives
notified by Trustee. Post any funds discharge.If bankruptcy is dismissed,
distributed to county. Terminate and resume collection.
write off balance after distribution is
complete and county receives or
obtains notification. If bankruptcy is
dismissed, resume collection.
IPV/No Indictment Upon notification, suspend. Leave in Suspend, file proof of claim, post
(Codes A, B, D, L [most], Z) suspense until the order of discharge any payments received during
is received if it is a no assets case. If protection, terminate balance at end
assets, submit proof of claim when of protection, when debtor receives
notified by Trustee. Post any funds discharge.If bankruptcy is dismissed,
distributed to county. Terminate and resume collection.
write off balance after distribution is
complete and county receives or
obtains notification. If bankruptcy is
dismissed resume collection.
The state can file an adversary
proceeding objecting to discharge of
debt if the case meets the criteria.
Contact the State Claims/Collection
Office if you believe this is an
option. The Attorney General’s
office MUST be involved. The
request must be filed within 60-90
days (according to the court order)
from the date of the bankruptcy
filing. If the Court determines the
debt is nondischargable, resume
collection after case is dismissed or
Chapter 7 discharge is entered.
IPV/Indictment/Conviction Suspend. Do not file proof of claim. Suspend. Do not file proof of claim.
(Codes F, some L, P) After dismissal or debt discharge, After dismissal or end of
usually about 6 months, unsuspend reorganization period, when the
NOTE: This debt cannot be and collect, through any means debtor receives a discharge, usually
collected during the pendency of a allowed, full amount of restitution three to five years, collect, through
bankruptcy case but can be collected ordered by the Superior Court. If any means allowed, balance of
after the bankruptcy case is over. It bankruptcy is dismissed, resume restitution ordered by the Superior
cannot be discharged. collection. Court. If bankruptcy is dismissed,
resume collection.
VOLUME IV - BENEFIT RECOVERY MT-7 - 10/08 PAGE 4040-2
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