bankruptcy affect Social Security payments

Clients commonly ask us, will bankruptcy affect Social Security payments? Generally, your Social Security benefits are protected under Chapter 7 and Chapter 13 bankruptcy. Therefore, the funds belong to you and the trustee cannot take them. See bankruptcy law 11 U.S.C. 522. The monthly benefits that you receive in Social Security are exempt from being seized or garnished. However, each case is different and you should speak with a bankruptcy lawyer if you have questions. This article about how bankruptcy affect Social Security payments is general in nature, and not legal advice for any particular case or circumstance.

Will Bankruptcy Affect Social Security Payments if Kept in a Separate Bank Account

It may be helpful, prior to filing bankruptcy to your keep your Social Security payments in a separate bank account from your regular funds. This is because a bankruptcy trustee will look at six months of bank statements up to the date of when you file your bankruptcy petition. If your Social Security payments have been mixed in with your personal money it can create issues. For instance, the trustee may argue that you cannot differentiate and prove which funds are Social Security money and therefore cannot receive the Social Security protection. This is one of the many reasons why it is important to have a bankruptcy attorney assist you. A successful bankruptcy plan should begin before your Chapter 7 or Chapter 13 bankruptcy case is filed.

If your Social Security benefits have already been mixed (or “comingled”) with your personal funds within one bank account, you may be able to still protect those Social Security funds by way of the “wildcard exemption.” For more information on exemptions click here. The wildcard exemption is an additional $4,000 that is allotted to you to protect your personal property, including income. See Florida Statute 222.25

Chapter 7 Means Test

In Chapter 7, you do not list your Social Security payments on your Means Test. The means test is necessary to qualify for Chapter 7. Thus, you have a greater chance of passing the test and qualifying for Chapter 7 because your income will be lower. The Bankruptcy Code provides that Social Security is not included in “current monthly income.”  See Bankruptcy law 11 USC 101. The means test can be very complicated. If you need assistance hire a bankruptcy lawyer to help with filing for Chapter 7 bankruptcy. The means test has a lot of nuances, and requires a thorough understanding of bankruptcy law.

Tampa Bankruptcy Law Firm

If you are having a difficult time meeting your financial obligations Florida Law Advisers, P.A. may be able to help. Our Tampa bankruptcy attorneys have years of experience helping clients obtain a fresh start. We combine our experience and skills in the courtroom with a thorough knowledge of the law to help achieve the results our clients need and deserve. When you hire Florida Law Advisers, P.A. you don’t just get legal advice, you get experienced bankruptcy lawyers by your side every step of the way. To learn more about how Florida exemption law can affect your bankruptcy call us today at 800 990 7763.

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