Filing For Bankruptcy Won't Necessarily Cut Your SSD Benefits
Each year, there are many people in the U.S. who deal with deep financial issues and view bankruptcy as a necessary path to regain financial freedom. Yet, some people whose current disposable income features social security disability (SSD) benefits are scared of filing because they don't want to lose that source of income. This is quite understandable, since SSD benefits are a huge portion of what they have each month. If you're one of them, know that SSD benefits aren't always counted as disposable income in bankruptcy. Here's why.
The means test doesn't take SSD benefits into account
Any individual who wishes to see their bankruptcy's filing approved is subject to the means test requirement. The purpose of this test is to restrict the benefits associated with bankruptcy to individuals who seemingly don't have the capability to get out of debt on their own.
When computed, the means test deducts a certain number of expenses incurred each month from the borrower's monthly income, excluding the SSD benefits, until the actual disposable income is found. If after this calculation, your disposable income is too high, you're likely to see your bankruptcy application be denied. Put in simplest terms, the means test determines your eligibility to the bankruptcy's benefits.
Under chapter 13, you're required to disclose your SSD benefits
Depending on the type of bankruptcy you intend to file for, you might or might not be required to disclose the amount of money you're getting each month from the Social Security Administration (SSA). Indeed, under chapter 13, all SSD benefits must be listed in your bankruptcy's application. This requirement basically means that the level of your monthly SSD benefits may reduce or increase your chances of being approved.
Yet, there are two things that you must keep in mind:
- The disclosure of SSD benefits isn't always mandatory
- You have the legal right to challenge the disclosure requirement
There are certain judiciary districts where there isn't such a disclosure requirement. This signifies that the trustee handling your application won't ask you to list your SSD benefits. Nevertheless, it's important to know that if the trustee requires you to do so, then you may request a hearing before the judge to contest their demand.
As you might see, filing for bankruptcy chapter 7 or 13 won't necessarily cut your SSD benefits. If you're worried that the amount you're receiving from the SSA be altered as a result of the legal procedure, then make sure you hire a social security attorney at places like Gieg Law Offices who will plead your case before the judge.
