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Over 65 million Americans receive social security benefits to make both ends meet. If your financial struggles persist and there is a dark cloud of debt hanging over your head, you might consider filing Chapter 7 bankruptcy.
However, you are probably worried about losing your social security benefits after filing for bankruptcy. It is advised to consult with an experienced bankruptcy attorney in North Carolina to discuss how your filing may impact your eligibility for social security benefits.
How Does Chapter 7 Bankruptcy Affect Your Social Security Benefits?
The mere thought of losing social security payments or having your benefits reduced due to filing for bankruptcy can be overwhelming. Does filing for Chapter 7 bankruptcy affect social security payments in North Carolina?
The short answer is that your monthly social security payments will most likely remain intact after your filing. However, the fact that you are receiving social security benefits could potentially impact your bankruptcy filing.
Social Security Payments are Treated as Income in Bankruptcy Filings
While your social security benefits will not be affected by your Chapter 7 bankruptcy filing, your eligibility for bankruptcy could be impacted by the amount of your monthly payments. This is because social security payments are treated as income for bankruptcy purposes.
However, if you are receiving social security benefits due to your disability or age, the monthly payments may not be considered income when filing for bankruptcy. This exception can help you qualify for bankruptcy debtors if you are currently receiving monthly benefits. It is also helpful that social security benefits are typically not treated as income that can go toward paying back the debtor’s creditors.
Lump-Sum Social Security Payments Could be Viewed as Your Asset
When the Social Security Administration (SSA) owes you benefits for several months, you are likely to receive a lump-sum payment. Receiving a large payment could cause potential problems in your bankruptcy filing because the bankruptcy trustee could argue that the benefits are no longer protected.
This is especially common when you receive a lump-sum payment and deposit it into an account in which your income is deposited. If the trustee views your lump-sum social security payment as an asset part of your estate, do not hesitate to discuss your options with a knowledgeable bankruptcy lawyer in North Carolina.
How Does Your Bankruptcy Affect Social Security Payments and Vice Versa?
For many people, bankruptcy is their only option to resolve their debt and stay afloat financially. However, things can become complicated if you are already receiving social security benefits and are considering filing for bankruptcy.
All of your funds, transactions, and finances, including your monthly social security payments, will be under scrutiny when filing for bankruptcy in North Carolina. For this reason, you need a skilled bankruptcy attorney on your side. Your lawyer will help you understand how your bankruptcy filing may impact your social security benefits and vice versa. Contact our bankruptcy attorneys at Arnold & Smith, PLLC, to schedule a consultation and discuss your particular case. Call at (704) 370-2828 or fill out our contact form. Now taking cases throughout North Carolina with offices in Uptown Charlotte, Mooresville and Monroe.
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