Bankruptcy Lawyer Bryan W. Stone answers the question: “What is Chapter 7 Bankruptcy?”
If you are considering filing for bankruptcy, chances are you’re in the midst of some serious financial difficulties. No one would consider going through such a process unless they were truly struggling to make ends meet. Those who are experiencing such financial problems likely have taken other steps to shore up their finances before ever getting to the stage of contemplating bankruptcy. That means they may already be receiving other financial assistance, in the form of housing vouchers, disability payments or food stamps. So what does filing bankruptcy do to these other sources of support?
Many millions of people receive governmental housing assistance each year, often in the form of vouchers provided by the Housing Choice Voucher Program. This program aims to subsidize the rent of low-income individuals who live in properties owned by private landlords (often referred to as Section 8 housing). Though it’s good news that filing for bankruptcy will not exclude a person from receiving housing vouchers, there are some issues to be aware of. Landlords are legally allowed to consider a person’s credit history when deciding whether to approve a rental application. That means that if an applicant previously filed for bankruptcy protection, it’s possible a landlord could reject this person, even if the person has a Housing Choice voucher.
Disability income is crucial for many people who receive it. There are two main types of disability payments, Social Security disability payments (SSDI) and Supplemental Security Income (SSI) disability payments. First things first, SSI disability payments are always exempt from bankruptcy, meaning the bankruptcy trustee cannot take this money and use it to repay creditors. These benefits are designed to help the elderly or disabled individuals with next to no income afford basic necessities. SSDI is treated differently and whether it is exempt depends on a variety of factors, including the person’s location. In most places, ongoing SSDI benefits are exempt from bankruptcy and will not be seized by the court to repay creditors. In some states, previously paid SSDI lump sums are not fully exempt and any money paid over and above what is necessary for your care and maintenance can be seized.
Though most people refer to it as the food stamp program, the formal name is the U.S. Supplemental Nutrition Assistance Program (SNAP). The program exists as a way for the federal government to assist low-income individuals across the U.S. get the food they need to survive. Experts believe around 45 million Americans collect food stamps each year, meaning a sizable share of the country receives these benefits. So how does filing bankruptcy impact food stamps? Thankfully, not a whole lot. Individuals are eligible for SNAP regardless of their bankruptcy status. The only real way that food stamps and the bankruptcy process interact is when it comes to the Chapter 7 means test. When deciding whether a person qualifies for filing Chapter 7, it’s important that food stamps are taken into account as a part of that person’s income, assuming the person is already receiving these benefits. In some cases this might impact eligibility for Chapter 7.
If you are contemplating bankruptcy in the Charlotte area, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with legally sound advice for your particular situation.
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