If you receive Social Security benefits and you are considering filing a personal bankruptcy, you are likely concerned with how your benefits will be impacted. It is important to understand that you will not lose your social security benefits due to a bankruptcy filing, but your benefits can impact your Chapter 7 or Chapter 13 case.
If you file a Chapter 7, social security benefits based upon your age or disability will not be considered part of your income. This may be important in determining your eligibility to file a Chapter 7 case under the “means test.” Additionally, your benefits will not be used to pay your creditors, but they can be considered by the court in determining your ability to repay your creditors.
In a Chapter 13 filing, your social security benefits are considered by the court in determining your ability to make the monthly payments required by your Chapter 13 plan, but the funds should not be used to actually pay your creditors. As a result, if your social security benefits are your only source of income, it may be more difficult to file a Chapter 13 case, so talk to us about your options.
It is important to note, however, that your benefits may be considered an asset of your bankruptcy case if you received a lump sum payment of benefits. Lump sum payments occur when benefits from previous months are paid all together. If this large payment is deposited into your bank account, the trustee might consider a portion of it an asset of the bankruptcy estate if it exceeds the amount needed for your basic care and support.
If you are planning to file a personal bankruptcy case and you receive social security benefits, it is helpful to have your benefits paid into a dedicated bank account that is used to hold only those benefits. This prevents your benefits from being comingled with other funds and helps provide protection from the bankruptcy trustee.
To learn more about how Chapter 7 or Chapter 13 bankruptcy impacts your social security benefits, contact DeLadurantey Law Office, LLC.
The “Milwaukee Bankruptcy Attorneys,” DeLadurantey Law Office. LLC handle Chapter 7 and Chapter 13 bankruptcies, as well as debt negotiations, debt relief, mortgage loan modifications, and foreclosure defense and debtor’s rights matters. We serve the areas of Milwaukee, South Milwaukee, West Milwaukee, Milwaukee County, and Waukesha County, including the municipalities of Big Bend Village, Brookfield City, Brookfield Town, Butler Village, Chenequa Village, Delafield City, Delafield Town, Dousman Village, Eagle Town, Eagle Village, Elm Grove Village, Genesee Town, Hartland Village, Lac La Belle Village, Lannon Village, Lisbon Town, Menomonee Falls Village, Merton, Town, Merton Village, Mukwonago Town, Mukwonago Village, Muskego City, Nashotah Village, New Berlin City, North Prairie Village, Oconomowoc City, Oconomowoc Lake Village, Oconomowoc Town, Ottawa Town, Pewaukee City, Pewaukee Village, Summit Town, Sussex Village, Vernon Town, Wales Village, Waukesha City, and Waukesha Town. Call DeLadurantey Law Office by phone at (414) 377-0518.