Filing for Chapter 13 or Chapter 7 bankruptcy can provide a vital lifeline for people struggling with unmanageable debt, but it does sometimes mean surrendering some of your assets. This can be a worrying prospect for borrowers on Social Security, many of whom rely on it to meet their basic living expenses. Fortunately, public benefits are typically exempt from seizure, and may even help you qualify for bankruptcy protection. Below, learn about the process and how you can protect yourself. 

Asset Seizure

In a Chapter 7 bankruptcy case, the court may seize some of your assets in exchange for eliminating most types of unsecured debt. However, a wide range of personal property is excluded from seizure, including Social Security and other benefits. In fact, the list of exemptions is so extensive that a skilled attorney can often help people get the debt relief they need without surrendering anything at all.

Passing the Means Test

Qualifying for Chapter 7 bankruptcy requires proving you don’t have the resources to cover your debts, which is a process known as the means test. To automatically qualify for discharge, your total monthly income must be less than the average income of similar families in your state. Fortunately, Social Security benefits aren’t counted as income in bankruptcy cases, which makes the qualification process substantially easier.

Social Security in a Bankruptcy Case

Chapter 7 bankruptcy allows you to make up missed payments on mortgages, auto loans, and other secured debts. Before the court allows your bankruptcy to go through, you’ll have to submit a detailed payment plan that includes all of your income.

Unlike Chapter 7, Social Security is considered income in a Chapter 13 filing. Because your payment plan should include all of your disposable income, Social Security benefits can have an impact on how much you’ll be expected to pay every month.

With offices in Dalton and Calhoun, Hurtt & Johnson, LLC provides detailed legal advice and personal attention to borrowers throughout Georgia. If you’re thinking of filing for bankruptcy, you can rely on their team to help you establish a more secure financial future. Learn more about the benefits of filing for bankruptcy online, follow their Facebook for additional legal tips, or call (706) 226-5425 to schedule your initial consultation.