Bankruptcy and Social Security Retirement

It can be next to impossible to predict when financial hardship will strike. Losing your job, facing a chronic medical illness, or other unforeseen circumstance can lead to great financial difficulty. When such circumstances cause you to be unable to pay your debts, you may want to consider filing for bankruptcy. Doing so can help you protect yourself from further financial harm. Filing for bankruptcy is not a simple process, and you may be concerned with how bankruptcy can impact your life. If you are worried that filing for bankruptcy will derail your social security payments, read the information below. Then, contact an experienced attorney in the Bay Area for bankruptcy help.

Types of Bankruptcy
There are two types of bankruptcy: Chapter 7 and Chapter 13. Under Chapter 7 bankruptcy, you can discharge some types of debt. To qualify for Chapter 7 bankruptcy, you must:

       ● Earn less than the median income for a California household of your size; or

       ● Be unable to pay your debts with your disposable income.

Chapter 7 bankruptcy is helpful for individuals that have insurmountable debt they simply cannot pay. Filing for this type of bankruptcy can relieve the financial pressures caused by such debt.

Like Chapter 7, Chapter 13 bankruptcy can help you resolve financial hardships due to debt. With Chapter 13 bankruptcy, you can reorganize your debt rather than discharging it. Reorganizing your debt allows you to create a structured payment plan based on what you can realistically afford to pay. To qualify for Chapter 13, you must:

       ● Have less than $1,149,525 in secured debts and $383,175 unsecured debts; and

       ● Not have filed for either Chapter 7 or Chapter 13 recently.

Your Chapter 13 repayment plan will be based in part on how much income or other assets you have available.

Your Social Security Payments in Bankruptcy
After paying into the system for years, you may now be collecting your Social Security retirement payments. If you are facing bankruptcy, you may be worried that those payments will either be counted as income in your Chapter 13 repayment plan or in your Chapter 7 case. Many retirees depend on these Social Security payments as their main or sole source of income. Having to use a portion of these payments toward debt repayment would cause unbearable financial strain on you and your family.

Federal law protects your Social Security payments during bankruptcy proceedings. Your Social Security benefits are considered exempt assets for bankruptcy purposes. This means that your Social Security retirement payments will not be counted as income in your bankruptcy case. So, a bankruptcy judge or trustee cannot force you to use your Social Security to repay your debt in either Chapter 7 or Chapter 13 cases.

Call Oakland Debt Relief Lawyers for Bankruptcy Help
Are you retired and considering filing for bankruptcy in California? If so, contact the experienced bankruptcy team at the Law Offices of Melanie Tavare. Call us today to schedule your free consultation. During that consultation, you can speak with a skilled attorney about how bankruptcy could help you.