CLAIMS HANDBOOK - Department of Human Services
CLAIMS HANDBOOK - Department of Human Services
CLAIMS HANDBOOK - Department of Human Services
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BENEFIT RECOVERY (<strong>CLAIMS</strong>) <strong>HANDBOOK</strong><br />
BANKRUPTCY<br />
Customers may be legally relieved <strong>of</strong> a TANF debt by filing bankruptcy. A Food Stamp<br />
(SNAP) claim is a federal debt and therefore cannot be discharged in bankruptcy but<br />
collection must be suspended while the bankruptcy is active. Suspend all claims<br />
immediately when notified that a bankruptcy has been filed. Any attempt to collect the<br />
debt, including generation <strong>of</strong> notices <strong>of</strong> delinquency, must cease until the bankruptcy is<br />
discharged or dismissed. Liquidation <strong>of</strong> the debtor’s property (Chapter 7) relieves the<br />
customer <strong>of</strong> all debt liability. Debt reorganization (Chapter 13) allows the debtor to retain<br />
possessions and establish a payment plan with the bankruptcy court. This payment plan<br />
may remain in effect for up to 5 years. Claims must remain in suspended status until the<br />
court discharges or dismisses the case.<br />
Any claim established after filing may be collected unless the order is amended to include<br />
the subsequent claim.<br />
TANF claims not discharged and all Food Stamp (SNAP) claims will be returned to<br />
collection status after the bankruptcy period has ended.<br />
TANF claims adjudicated by prosecution / conviction for Intentional Program Violation are<br />
not protected, but must not be collected involuntarily or have notices mailed while the<br />
debtor is in bankruptcy status.<br />
The county claims manager or OPIC investigator should attend the meeting <strong>of</strong> creditors<br />
and present evidence <strong>of</strong> the claim.<br />
Post payments received from the bankruptcy court using source code (Y). Any voluntary<br />
payment received directly from the customer must be accepted and posted using source<br />
code (P).<br />
When notified <strong>of</strong> a bankruptcy:<br />
Suspend collection and immediately forward a copy <strong>of</strong> all documents to the Claims /<br />
Collections Unit. Retain original copy in claim file. The Claims / Collections Unit will<br />
complete the Pro<strong>of</strong> <strong>of</strong> Claim form and return to the bankruptcy court if appropriate. Pro<strong>of</strong> <strong>of</strong><br />
Claim is not required for IPV claims adjudicated via prosecution / conviction for Intentional<br />
Program Violation. Samples <strong>of</strong> notifications from the bankruptcy court, explanations <strong>of</strong><br />
bankruptcy terms and “Pro<strong>of</strong> <strong>of</strong> Claim” forms and their instructions are located in the Forms<br />
Section.<br />
The Claims / Collections Unit will file an adversary proceeding objecting to discharge for all<br />
Food Stamp (SNAP) claims.<br />
The Claims / Collections Unit will provide a completed copy <strong>of</strong> the Pro<strong>of</strong> <strong>of</strong> Claim and any<br />
other documents received directly from the Bankruptcy court will be forwarded to the county<br />
to be maintained in the claim file.<br />
If there has been no contact with the bankruptcy court, including receipt <strong>of</strong> payments,<br />
within 6 months, the Claims / Collections Unit will complete a status inquiry by contacting<br />
the regional bankruptcy court or the district automated service.<br />
Rev December ‘10 41