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Policy Statement
A bankruptcy order can affect the Families First grant amount. Usually, the bankruptcy order will specify
that all or a part of the Families First grant amount be paid directly to the
bankruptcy court for disbursement to the individual and his/her debtors.
During the period the bankruptcy order is in effect, the Families
First grant cannot be reduced due to an overpayment. Even though benefit reduction cannot be
imposed on a bankruptcy case while the bankruptcy order is in effect, claims
must continue to be completed on any overpayments that occur after the
bankruptcy order is issued. Once the
bankruptcy is discharged, recovery can be attempted on any post-petition
overpayments that have occurred.
Other appropriate actions, such as a grant increase or decrease due to
changes in income or AU size, can still be made. In addition, disqualifications and
sanctions can be imposed and cases may be closed, if appropriate.
Verification
The county will receive a bankruptcy order from the court Bankruptcy
Trustee.
Documentation
Document the eligibility and case management system that the client’s
case has a reduction in the grant amount due to a bankruptcy.
Procedures
When the Department is notified that a Families First recipient has
filed for bankruptcy protection:
·
Stop any
collection activity to resolve a claim.
·
Notify
Investigations immediately to ensure the debt to the Department is included
in the bankruptcy filing so that it can be discharged through the bankruptcy
order.
·
Forward the
bankruptcy order immediately to FA/Bankruptcy, Fiscal Services, in the State
Office. Following the receipt of the
order, the FA/Bankruptcy worker will contact the caseworker regarding the
appropriate amount to be fiated for the bankruptcy.
·
Contact the
FA/Bankruptcy worker regarding any change in the grant amount (including case
closure). The FA/Bankruptcy worker
will contact the Bankruptcy Trustee.
Prompt communication between the field and the FA/Bankruptcy worker in
the State Office is essential, since there is no automated link for this part
of the process.
Note: When
a case with a bankruptcy order is closed for any reason (including failing to
appear for a renewal), the individual is responsible for the payment to the
bankruptcy court in the month following closure.
·
Contact the
FA/Bankruptcy worker if the case is renewed so that he/she can determine that
the bankruptcy order continues to remain in force and can act appropriately.
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