just received notice from GM that we owe them over $14,000 !!!

[lookin4info]

My husband took a buy out from GM over 20 yrs ago when his plant shut down but was still able to draw a small pension check from them beginning at age 62. One week after we filled CH 13 we receive a letter telling us that he has been over paid more than $14,000 and his benifits were being reduced beginning March 1 by $200. If we don't send a check for the $14,000 right away (and we won't be!) they will reduce the new benefit by 1/2 until it is paid. This will result in more than a $300 a month lost income until the year 2025. Since he drew less than $400 anyway, this pretty much wipes out the income from this source.

I have a call into my attorney, but he hasn't called back yet. Does anyone know if this can be added into our plan instead of being paid through the deductions. I'm really worried what this will do to our plan, our 341 is scheduled 2/28. Our proposed plan is $1049/mo. for 46 months w/1% going to unsecured creditors.

Thanks for any help you can give, looking for the silver lining...

[despritfreya]

This is very interesting and I do not have an answer. I believe your attorney is going to have to do some research. The pension administrator may have a right of recoupment to the funds. The over payment is not a typical debt as it is owed to a qualified pension plan. It is not even akin to an over payment of Social Security or unemployment comp which is dischargeable.

I wish I could help but, please, keep this thread updated. I really would like to know what your attorney thinks.

Des.

[lookin4info]

I agree that this must be an unusual situation! Thanks for your reply, I'll post the results when I find out something. In the meantime, if anyone else has
any ideas here, let me know.

One addtional concern I have is that since 2007, we have paid taxes on $14,000 more than we should. I have no clue how that can be adjusted. That will be interesting also.

[catleg]

I think the tax issue will be moot since you don't have the capacity to repay the 14,000 overage.
They just shot a $300 hole in your 13 plan payment, unless you have enough padding elsewhere to cover it.

[BKOnce]

GM sucks.. their stocks go up but they still screw everyone's benefits.

[Charlie777]

I think this is more complicated. I suspect that GM has to become an unsecured creditor, cannot reduce the payments, and the $14,000 gets in line with other unsecured claims. It's imperative that your attorney look carefully at this.

[lookin4info]

Charlie777, I'm hoping you're right, lol. I spoke to my attorney today and I'm faxing him a copy of the letter we received. He said he would have to look into it before he could tell me exactly how it would be handled.

As far as a $300 pad in our plan, oh boy, that will be very tricky. I think we were down to the nitty gritty already. I'll keep you all posted!

[justbroke]

Even more complicated is that if this is a company-sponsored Plan, there may be terms that won't allow the Bankruptcy to penetrate the pension plan and its rules. However, a savvy attorney might file a claim -- on behalf of GM -- for $14K as an unsecured debt, and then litigate it in the Bankruptcy court.

It would be quite interesting, and I'm sure even Des would be interested in the outcome!

My thoughts are with Des that this is not dischargeable and hence not subject to discharge because the right of setoff existed both before the commencement of the case and the Plan can actually offset against a future liability (future Plan payments).

[daylate]

Just something to consider-GM filed for bankruptcy and was reorganized-my guess is pension plan(s) were not affected but it is worth at least taking a quick look at.
No wonder GM was ficacta only took them 20 years to figure something out. Sheesh. Good luck

[HHM]

Yep, this one has me stumped as for a specific answer.

The research would begin on identifying how GM has a right to set off and the nature of that set off. Then trying to figure out if that is analogous to other similar situations (i.e. over payment of SSI or Unemployment benefits) and could be discharged. However, I lean the other way, I think it is dischargeable. It is still a debt, GM is saying they have claim against you and there is no obvious line item in section 523, exception to discharge, that seems to apply (maybe a18, but even then, that references loans against pensions); but you could be in for a long haul to get the bureaucracy of GM's retirement plan to recognize it and continue paying 100% benefits. The unclear part of the puzzle is what happens to the pension benefit. That is probably well beyond the scope of what any BK attorney could help you with, you probably need to see a employee benefits lawyer for that.

[despritfreya]

The below cite is the seminal case dealing with recoupment for an over payment of pension benefits.


Brown v. General Motors Corp., 152 B.R. 935 (W.D. Wis., 1993)

"This Court concurs that an erroneous overpayment in connection with a private employee benefit plan gives rise to a valid right of recoupment against future benefits where such recoupment is available under the Plan or by agreement between the parties. The provisions of the present plan and the agreement executed by the plaintiff provide as the sole remedy for overpayment recovery against future benefits. No interest is recoverable and no independent claim beyond the amount of future benefits is available. Under these circumstances the right exercised by the Pension Plan is not an action on a claim or the collection of a debt."

Des.

[HHM]

Well, there you go.

I am glad someone looked it up
This is what happens when you "guess"

[justbroke]

I was going to look it up.

[lookin4info]

Wow, thanks for all the input, thought, and research into this matter. I faxed the GM letter to my attorney at the end of last week so I'm giving him some time to do his research. I think we're in a pickle here. At least his benefits cover the repayment (even though it will take until 2025!), but I'm very concerned about how the $300 income loss will affect our plan. I think I'll send him your info Des. I will post the final results when I have them.

We haven't had the 341 yet, but our proposed plan is 46 months w/1% to creditors. I know we can't pay any less to creditors so guess the plan will be extended.

Any thoughts on if the payment will go up, even though the income is going down?

Ya know what they say about if it weren't for bad luck, I'd have no luck at all

[lookin4info]

Well, the final results are that we can't include the $14,000 in our Ch 13 plan abd GM can reduce the benefits until its paid back, for the next 14 years. We have made an appointment to go in and amend our plan since the monthly income will be $300 less per month.

Thanks to all who commented and the research Des. I love this sight and read on it almost every night. Thanks again.