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Hundreds of Michigan residents may have been forced into bankruptcy by false fraud allegations leveled by Michigan’s Unemployment Insurance Agency, irreversibly damaging their ability to obtain credit or buy a home, the Detroit Free Press reported yesterday. The state has conceded its Michigan Integrated Data Automated System (MiDAS), which began making fraud determinations in October 2013, had a 93 percent error rate. Since that system went online, there’s been an explosion in the number of cases the Attorney General’s Office has brought in federal bankruptcy court to recover alleged overpayment of unemployment insurance benefits. Now, attorneys are asking whether claimants who felt forced into settlements of unemployment insurance debt they may not have owed can have their bankruptcy cases reopened. The massive error rate is compounded by the state’s highest-in-the-nation 400 percent penalties, and huge problems Michigan Auditor General Doug Ringler has identified with a lack of adequate notice sent to claimants about the alleged overpayments, including notices sent to the wrong addresses or through online unemployment insurance accounts that former claimants had no reason to log on to and check. Since the law allows for debts owed to the state Unemployment Insurance Agency to live on after a bankruptcy in which most other debts are erased, those caught up in a bankruptcy have a strong incentive to pay up to settle the state’s claims and end their wage garnishments, even when they don’t believe they have done anything wrong.