Can I File Bankruptcy While on Social Security?
If you receive Social Security benefits and plan to file for bankruptcy, you may be wondering, “Can you file bankruptcy while on Social Security?” Below, we’ll discuss how bankruptcy affects Social Security benefits and what you can do to help ensure you retain your benefits when filing for bankruptcy.
If you have questions about the bankruptcy process or about how bankruptcy may affect your benefits, contact a Bankruptcy Attorney at Amourgis & Associates, Attorneys at Law today for a free consultation.
Can I File Bankruptcy While on Social Security Benefits?
Federal law protects Social Security benefits during the bankruptcy process. You can file for bankruptcy while receiving Social Security benefits. Social Security benefits are assets, but they are exempt from the bankruptcy process. Even though Social Security is considered part of your income for tax purposes, it is not considered income in the bankruptcy process. However, you must indicate that these funds are exempt so that you can keep them.
You should be cautious when moving money around, as mixing Social Security income with income from other sources, could make it more difficult for you to distinguish between your exempt Social Security benefits and your non-exempt income. It is advisable to keep your Social Security benefits in a separate account so that you can easily demonstrate what is exempt.
Will Filing Bankruptcy Affect My Social Security?
Filing for bankruptcy should not affect your Social Security benefits. When you file for bankruptcy, you will list your property in your bankruptcy petition. Much of your property will be considered “non-exempt,” including cash, investments, jewelry, and other personal property. Social Security benefits, however, are considered “exempt property.” So, even if you must liquidate your other non-exempt assets, you get to keep your Social Security benefits.
Is Social Security Income Included in the Bankruptcy Means Test?
When debtors file for Chapter 7 bankruptcy, they must pass a “means test,” which essentially determines whether or not they are eligible to file for Chapter 7 bankruptcy. Because Social Security is part of a person’s income, you may wonder how the bankruptcy means test and Social Security Income interact.
Social Security benefits are not considered income under the means test. All types of Social Security benefits are considered “assets” and not “income” under bankruptcy law, so no matter what type of Social Security benefits a debtor receives, they do not count towards the means test.
While you do not include Social Security as income, you need to include it in your budget.
Contact Our Ohio Bankruptcy Attorneys Today
If you are planning to file for bankruptcy and receive Social Security income, don’t hesitate to reach out to one of our dedicated Akron bankruptcy attorneys at Amourgis & Associates, Attorneys at Law today.
We have the knowledge and skills to help guide you through the bankruptcy process and to help ensure that you can retain exempt property such as Social Security benefits. Contact us today for a free case evaluation.
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At Amourgis & Associates, Attorneys at Law, we only represent consumers. We fight for regular people who have been seriously hurt in accidents. We fight for people who are being crushed by overwhelming debt and need a fresh start. We fight for individuals and families. Never businesses. Never insurance companies. We are loyal to the consumer.
