Will I Lose My Social Security Benefits if I File Chapter 7?

Will I Lose My Social Security Benefits if I File Chapter 7?

Millions of Americans rely on their social security benefits to pay their bills each month. Some also have financial difficulties. If you are one of these individuals, you might consider a Chapter 7 bankruptcy filing to provide relief for your financial stress. You might also be concerned about how your social security benefits will be impacted if you file for bankruptcy. It is best to schedule a private consultation with a knowledgeable North Carolina bankruptcy attorney to learn about how social security payments and bankruptcy can affect each other.

Are Social Security Payments Impacted in Chapter 7 Bankruptcy?

Losing social security payments or having them decreased because you file for bankruptcy doesn’t make much sense for most debtors. You might be relieved to find out that you will not lose or decrease your social security income by filing for bankruptcy. Your monthly benefits are protected and will remain the same. However, your benefits could actually impact your bankruptcy situation.

Social Security Benefits as Income in Chapter 7 Bankruptcy Petitions

Although your benefits will not be impacted if you file for bankruptcy, your ability to file bankruptcy could be impacted by the amount of benefits you receive. Keep in mind that if you receive social security benefits because of your age or your disability, they are not labeled as income for bankruptcy purposes. This fact can help you qualify to file Chapter 7 bankruptcy under the means test. Social security payments are also not considered income that can be used to pay back creditors. However, these payments could be included by the bankruptcy court to determine if you have the ability to pay your creditors.

Social Security as an Asset

When you are owed benefits from previous months, it is common to receive a lump-sum payment.  If you are someone who received a lump-sum social security payment instead of monthly benefits at any point, the bankruptcy trustee could consider this large payment to be in excess of what you need for care and support. If this happens, the lump sum would be labeled as part of your estate. Your North Carolina bankruptcy lawyer can help you weigh your options if this applies to your bankruptcy. Some of this lump sum could be exempted under North Carolina’s allowable property exemptions.

Questions about Bankruptcy and Social Security? Meet with a North Carolina Bankruptcy Lawyer

Bankruptcy is often a necessary process, but it has many intricacies that are confusing to a layperson. When you have a seasoned North Carolina bankruptcy lawyer on your side, you can be assured that all aspects of your finances, including your social security benefits, are considered in your bankruptcy. Your attorney can discuss how your benefits might impact your bankruptcy filing and allow you to make the decisions that need to be made. Call 855-206-0052 or use our convenient online contact form to receive your free no-obligation bankruptcy consultation with a North Carolina bankruptcy attorney at King Law Firm.