Posted on June 9, 2009 at 2:23 am Would filing bankruptcy affect my mother's Social Security disability benefits?

Posted on June 9, 2009 at 2:27 am She is just about to file, correct? But it really does not matter if she's about to, or is in it, or have just received a discharge, bankruptcy will not cancel or affect her right to receive Social Security benefits.

Posted on June 9, 2009 at 2:31 am If she files Chapter 7, for example, can the creditors touch the lump sum payment from her SSD benefits ?

Posted on June 9, 2009 at 2:54 am Under the federal law (Section 27 of the Social Security Act 42 U.S.C. Section 407) your mother's Social Security benefits are exempt from judgment (levy, garnishment), from creditors, and also from the trustee in bankruptcy. Although the federal government can withhold parts of her Social Security payments for taxes.

Posted on June 9, 2009 at 3:10 am You might want to consult with a social security disability lawyer before you file bankruptcy. Also just to clarify on exemptions, they differ from state to state, so you may also want to also see a bankruptcy lawyer.With regards to the lump sum Social Security benefits, the creditors can't touch them if it is already in your mother's possession, or if it has been received, before filing bankruptcy,  but an issue might arise if it has been sitting in her bank account when she filed. The creditors or trustee can make an issue off of it and include that in her bankruptcy estate. They can also make an issue out of that lump sum (on going or already received) even though it has been transferred voluntarily to somebody else

Posted on June 9, 2009 at 7:40 am Doubleickey24 is correct- an issue could potentially arise if the money has been sitting in a bank account prior to the date when she filed the bankruptcy petition. While creditors are not permitted to intercept these payments or take the money received from these payments after the fact, as previously stated, speaking with an attorney would be your best bet here if you plan to file. I would also like to add something in regards to Social Security and garnishment as I think overall there is some confusion in regards to this (not necessarily on this thread, but in general) issue. Social Security is exempt from garnishment or levy by your creditors. However, the federal government may withhold a portion of a person's Social Security if they are behind on child support, alimony, federally secured student loans or taxes.

Posted on July 22, 2009 at 11:30 am Future benefits are exempt.  Depending upon the state you live in, lump sum payments which the debtor received and still retains at the time of the bankruptcy filing may not be exempt, either in whole or in part.