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Do Social Security benefits count as income in a Chapter 13 bankruptcy?

No. 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 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 benefits to a bankruptcy trustee.

Yet there are Chapter 13 cases in which bankruptcy 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. Multiple federal appeals courts have held in recent years that Social Security benefits are off limits in bankruptcy cases.

Published October 10, 2018