Please Read: Post Discharge Collection of STATE TAX REFUND

[BrokeToo]

Info:
I filed Chapter 7 in Ohio in July of 2010. Included in this filing was a medical debt that had been turned over to the State's Attorney General Office, which was then assigned to collections by another attorney's office.

Details:
My case was discharged on 11/2/2010, and the notification was sent by the court via First Class mail on 11/5/2010, to the attorney/Attorney General's Office.

The Issue:
I have filed my 2010 Tax Return and have received a letter from the state that my Ohio State Tax Refund has been offset to the Ohio Attorney General's office.
This is 4+ months AFTER my discharge.


The Problem:
Obviously, this is a major violation in the fact that the debt was discharged and they have clearly been notified, but the real problem is that unlike most other collections actions post discharge, where the collection agency has simply mailed a letter trying to collect, MY situation has my money actually being automatically collected by the Ohio Attorney Generals Office from my Tax refund. This has me completely perplexed at how this can happen. I want my money back, and I want the book thrown at them. To me, this is a situation where even the STATE does not know, or abide by Bankruptcy Law and an official Court Order of Discharge.

They should pay me my money, a fine, interest, and damages.

What can I do? What should I do? Do any of you have Ideas/Details???

Thanks!

[justbroke]

Call as many bankruptcy attorneys as necessary to see if they'll take the case on contingency. They can earn some fees and you can get your money back, plus damages.

[HHM]

Let's back up...

To justbroke's point, most attorneys will NOT do these cases on contingencies, even with obvious cases, although the code does allow for attorney fee, the judges still exercise discretion in awarding such fees and many times don't.

Second, why does the Attorney General have the debt? What exactly is the nature of the debt? Was the AG's office actually notified in your BK.

As for what to do, what you do is file a Discharge violation complaint in bankruptcy court. But before going down that road, some clarification is in order regarding the above questions.

However, assuming the AG's office wasn't notified in your BK petition, you should write a letter and attach your BK petition (the first 2 pages), proof of filing date, proof of discharge (the discharge order) and see if they will simply give you back your refund. (note, before you bring the AP, the court will want to see this sort of attempt be made). If the AG refuses for some reason, then its time to head to BK court (assuming you really have a case), and since you tried to resolve it before going to BK court, you at least maximize your chance of getting attorney fees paid.

Generally, when you are dealing with a government entity, the problem is an internal snafu and nothing sinister, so best try to make an attempt to work it out before filing a discharge violation.

[justbroke]

I will need to agree with HHM on this. I'm not sure if you have at least attempted to contact them, with a copy of the discharge, and inform them that the underlying debt was discharged. At least give them a change to take corrective action. That's standard practice, at least in my District.

It may just be a governmental oversight, who knows. However, I get excited when someone violates the automatic stay or the permanent discharge injunction and usually, immediately, say file file file a complaint! There are steps though, in the process, that must be taken first, and HHM has provided that. That is, notification that they are in violation, and then see what they do. Always give them a definitive yet reasonable period to respond, but I wouldn't make it 30 days.

[df04527]

I am wondering the same thing of what this underlying debt was, why the AG has it and was it truly discharged?

[BrokeToo]

The debt was originally a medical debt and then turned over to a general collection agency that oversees medical debt (the name escapes me). It then ended up moving to the Ohio AG office as a collection account as I believe the medical debt collection agency was a governmental affiliated type account. Honestly, I'm not 100% positive. However they were notified and I have proof of that from the Discharge Order.

I will be mailing a certified letter to them tomorrow with my discharge and proof that they were notified. After that, hardball. I don't care if it's a state agency or not, a violation is a violation and any judge that does not treat that as such should not be on the bench.

Thanks for all of your thoughts and sound advice, they are much appreciated!

Of note, the collection agency that was trying to collect for the AG office has also harassed me on two occasions after my discharge, in which I have given them the bankruptcy information. I believe they are the culprit, so that's who I would go after first. Also, this debt was the sole reason that I filed bankruptcy to begin with!

[HHM]

I guess I am not understanding why the AG's office would be involved in the first place? Was this some sort of state run hospital (note, the only state run hospitals I am aware of are the loony bins...sorry, couldn't resist ) I even went to the Ohio AG's website to see if I could find anything on something like this and couldn't, the only thing close would be something related to medicare/medicade fraud, which would probably not be dischargeable.

I am with df04527, something isn't really adding up; in all the years on this forum, NO ONE has ever mentioned a run of the mill medical debt being collected by a state attorney general; my sense is, we are not getting the full picture here.

[discombob1]

Not saying this is what happened in your case, but the only time I have heard of this type of thing is for Medicaid fraud. If your debt related to Medicaid somehow, it may not be dischargeable. I suggest you verify that the debt was actually discharged... then if it was, nail them!

[BrokeToo]

This was not a medicaid/medicare claim.

I was a student at OSU during the time the debt was accrued ( had two ankle surgeries late '05 and early '06)

I had OSU Student Health Insurance (what a joke) at the time. The first surgery was covered. The second was not. I believe when the debt was turned to collections, it was to the Physicians Credit Bureau (PCB). This was then somehow turned over to the Attorney General. I have no idea how or why it was placed with their office.

[HHM]

Okay then...

try the above referenced steps. First contact the AG's office (or the collection point of contact) by phone and find out the status of the account, inform them of your BK etc. You will probably need to follow that up with a certified letter where you send them your BK info and a request for refund, give them 14 days. If that doesn't work, then it is time to consider going back into BK court for a discharge violation.

[BrokeToo]

HHM, I just got off the phone with the Ohio AG Office, and they basically put all of the blame on the collection firm that they were using to collect the debt. This should be very interesting as this is a fully discharged medical debt, that the collection agency did not update, who then reports it to the Ohio AG Office, and subsequently, the Ohio Tax Department has offset my refund because of this.

I have also called my lawyer, who will at minimum, get my refund back, but also has an in-house lawyer dedicated to prosecuting slimy collection agencies (such as this one). Funny enough, once this is over, I will also file a complaint with the Ohio AG Office for the very collection agency they are using! How ironic!

Anyone know what the fine is for a violation of a Court ordered discharge?

I will keep this updated as things move along for everyone's entertainment

[Charlie777]

Outstanding!

Make an FTC complaint as well, they won't do individual cases but "might" take action against firms with multiple / repeated complaints.

[df04527]

I believe the fines are 1000. per plus treble. I am not positive about that though as I've never seen one like your talking about. The part that makes this different is the Ohio AG involved. Have you received ANYTHING from the Ohio AG directly on this?

[BrokeToo]

df04527, the only thing that I've received in the past is the same State refund offset for the last two years, once the Ohio AG took possession of the debt. Again, and this was verified by the Ohio AG Office today when I spoke with them, this was for a medical debt.


I believe some of you are thinking that because the Ohio AG has their name attached to it, that this will be difficult to overcome. But it's important to understand that although it is a state office, it is no different than any other collection firm, UNLESS it is a tax issue or a type of fraud, neither of which my situation is.

The collection firm that was handling the debt for the Ohio AG Office (as in the firm who had been contacting me to pay the debt prior to my bankruptcy filing and discharge) is the entity that has faulted in this process, not necessarily the Ohio AG Office, although it is the executive entity for the claimed debt. My thoughts are that I may have two claims; one against the collection company and one against the Ohio AG Office.

I am not out for money because of this, other than the refund that is rightfully mine. However, I believe that this is a situation that needs to set an example, because it is not like they have a court-ordered judgment to collect from me and they can only collect on tax and fraud without one. The worst part is that my money was automatically taken from my refund without notice because of their lack of documenting. This is not my problem to account for, it is theirs and it is part of their business. Don't think for a second that I wouldn't put that money into my IRA and gain interest on it. Over the lifetime of the IRA, think of what interest I may be losing!

What a way to begin my "fresh start"!