Federal law says your benefits are protected.
On several occasions, Congress has made it clear that Social Security benefits are to be excluded from the financial assets that are used to repay creditors in a bankruptcy case. In addition, the Social Security Administration says it will not honor court orders to hand over anyone's Social Security benefits to a bankruptcy trustee.
Yet there are Chapter 13 bankruptcy cases in which trustees include Social Security benefits in repayment plans. If the debtor doesn't challenge this, the benefits may remain in the repayment plan. It's unclear how often Social Security is included, but it's often enough that courts have been asked to rule on the legality of the practice. In two separate cases recently, the U.S. Court of Appeals for the 8th Circuit and one of its appellate panels ruled that Social Security benefits are off limits in bankruptcy cases
Was this helpful to you?
Thank you - your feedback has been sent.