How does bankruptcy affect Social Security?

[anonymous]

All have is my social securiy to live on. It take's all I can get to pay for my medicine. How will bankruptcy affect my social security?

[Bankruptcy Helper]

Can my SSA income be garnished by my creditors?

If you are receiving Social Security income and you are considering filing for bankruptcy, contact a bankruptcy lawyer and they evaluate your financial situation and answer your questions.

So what will happen if you file for bankruptcy while receiving Social Security income? Are your creditors able to take your income?

The good news is that Social Security income is exempt in bankruptcy law (11 U.S.C. § 522 (d)(10)(A) ) Social Security income is exempt from levies, garnishment and assignments by most creditors. This also includes the trustee who is assigned to either your Chapter 7 or Chapter 13 Bankruptcy case.

What types of Social Security Income is generally exempt from bankruptcy? Income can include not only SSA retirement benefits but also Supplemental Security Income (SSI), and Social Security Disability Insurance (SSDI).

Keep in mind, although bankruptcy laws allow exemption of Social Security income in bankruptcy, some types of student loans, SSA over payments, taxes or other qualifying debts may affect SSA income. Although the bankruptcy automatic stay may temporarily halt collections of these types of debts, these collections may continue after the bankruptcy is filed.

How does SSA income affect a bankruptcy?

What does your income determine in a bankruptcy case? Income will determine whether or not you can file Chapter 7 Bankruptcy, the amount of payments you will make in your Chapter 13 payment plan, and whether you can repay your debts over a 3 or 5 year period.

• Means Test

After 2005, every debtor who files for bankruptcy has to complete a means test to determine whether or not they can file Chapter 7 or Chapter 13 Bankruptcy. What does the means test determine? It determines whether the gross income of the family is below the median income of other families in their state and whether they have enough disposable income to repay a portion of their debts.

After excluding SSA retirement or SSA disability benefits from the income calculation, if your other types of income are higher than the allowable income limit, you will have to file Chapter 13 Bankruptcy and repay a portion of your debts.

• Payment Period for your Chapter 13 Repayment Plan

Social Security income is excluded from the means test and is not used to decide the length of the Chapter 13 debt repayment plan.

• Income and Expenses

Where does Social Security become a factor in bankruptcy? All debtors must provide the bankruptcy court with a list of schedules which outlines all of their income, including Social Security retirement or Social Security disability benefits. Expenses must also be listed. The difference between the debtor’s listed expenses and income will generally determine the debtor’s plan payment amount.