Do you and your family rely on a disability payment to pay house, utility and living expenses? If you are unable to work and are concerned about what may happen to that check if you should file for bankruptcy, read further to find out if your Social Security disability payments (SSDI) and Supplemental Security Income (SSI) disability payments are protected.
In most cases your Social Security disability payments are protected in Chapter 7 bankruptcy because debtors count on that check to live. There are some exceptions including:
- where you live
- whether you receive Social Security disability benefits or payments from another source, and
- whether you are trying to protect past or future disability payments.
Discuss your current disability condition with your attorney to determine if it is protected from a trustee taking them in a bankruptcy case.
Future Disability Payments – Typically if a debtor is receiving ongoing payments they are exempt from Chapter 7 cases. State and federal government recognize this usually this check is needed to support the family.
Lump Sum Payments – If you received a lump sum disability payment before filing your case, you will have to trace the money and show that it was a Social Security disability payment to protect it from the Chapter 7 trustee. While most Social Security disability benefits are exempt in Chapter 7 bankruptcy, certain jurisdictions have created an implied exception that only protects amounts necessary for your care and maintenance. So depending on where you live, a Chapter 7 trustee may be able to go after a lump sum disability payment if it is not necessary for your support.
SSI – Supplemental Security Income Disability Payments – SSI is a federal program that provides financial assistance to elderly, blind, or disabled individuals with little or no income. SSI disability payments are designed to help people with their basic living expenses such as food, shelter, and clothing. Since SSI payments provide debtors with the minimum income necessary for support, they are exempt in bankruptcy by federal law. As with other lump sum payments a trace of the payments may need to show how it was used.
Consult Levine Law if you have questions about your disability payment and how it may be effected by a petition for bankruptcy.