Filing for Bankruptcy When You Are on Federal Disability

Are you currently receiving disability benefits through the Social Security Disability Insurance (SSDI) program? If you are receiving SSDI payments but also struggling with debt, you may be wondering about your options for filing for personal bankruptcy. Many SSDI recipients receive inaccurate information about the relationship between bankruptcy and federal disability payments, or they read common misconceptions about how certain benefits are treated in a bankruptcy case. In short, both SSDI and Supplemental Security Income (SSI) benefits are typically protected in a bankruptcy case, and receiving disability benefits does not prevent you from receiving a bankruptcy discharge. Our Florida bankruptcy lawyers can explain in more detail.

Benefits Administered by the Social Security Administration Are Usually Exempt

When a debtor files for personal bankruptcy, Florida’s bankruptcy exemptions are relevant in both Chapter 7 and Chapter 13 filings. In a Chapter 7 case, all exempt assets are protected from liquidation — the debtor keeps those assets. In a Chapter 13 case, exempt assets do not have to be counted when determining the debtor’s repayment plan terms and which debts may ultimately be eligible for discharge. In short, exemptions are beneficial to debtors filing for any type of personal bankruptcy.

In general, any type of benefits administered by the Social Security Administration (SSA) are exempt in bankruptcy, as well as in other circumstances such as lawsuits filed by debtor collectors (meaning that benefits administered by the SSA cannot be garnished). Both SSDI and SSI benefits are administered by the SSA and are generally exempt.

Debts Owed by SSDI Recipients Can Be Discharged in Bankruptcy

When SSDI recipients or debtors who receive other benefits through the SSA file for bankruptcy, their debts are not subject to additional scrutiny compared with other debtors. As a recent report from CBS News underscores, disability recipients can have credit card debt, medical debt, and other debts discharged in bankruptcy like other filers.

Knowing that your SSDI benefits will be protected in your bankruptcy filing may make you more eager to file. Yet there are considerations to keep in mind — all of your assets could be protected from creditors, and it might not ultimately be worth it to consider bankruptcy, for example. The best way to know if bankruptcy is right for you is to discuss the details of your case with a bankruptcy attorney.

Contact Our West Palm Beach Bankruptcy Lawyers Today for Help Filing for Bankruptcy When You Are Receiving SSDI Benefits

If you are currently receiving federal disability benefits and are considering bankruptcy, you should speak with a lawyer about how a bankruptcy filing will impact your benefits and other assets and liabilities. Generally speaking, as we discussed above, you can expect that your SSDI benefits will be protected in a liquidation bankruptcy, but bankruptcy cases can be complicated, especially for disability recipients who are married and have a spouse’s income, assets, and liabilities to consider. One of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC can speak with you today to learn more about your financial circumstances and to answer any questions you have. Contact our firm to get started on your bankruptcy filing.

Source:

cbsnews.com/news/credit-card-debt-discharged-bankruptcy-disability/