Chapter 13 and Social Security Benefits

We are seeing an aging population in San Antonio and throughout the rest of the country. With this, we are also seeing an increase in those who are receiving Social Security benefits. In general, Social Security benefits are for individuals who are medically unable to engage in full-time employment or have reached retirement age. These individuals receive an income benefit every month. The concern that many of my clients have is whether or not you can keep your Social Security benefits during the bankruptcy process.

Fortunately, for those living in Texas, the appellate courts have recently decided that Chapter 13 filings should NOT include Social Security benefits as disposable income for the purposes of bankruptcy. This is important because generally speaking, all disposable income must go to repay debts in a Chapter 13 bankruptcy. Thus for individuals in Texas, Social Security benefits are not taken away like the rest of your earned income.

Although Social Security benefits do not have to be used to pay a creditor’s claims, it is important to note that transparency is paramount. At our firm, we suggest that you let the Trustee know of ALL your finances and forms of income. After making that disclosure, we then ensure that the Social Security benefits are NOT to be used, in any way, to pay for any debts as part of the Bankruptcy Repayment Plan.

Social Security and Bankruptcy are areas of law that can be confusing and overwhelming. When the two overlap, you want to make sure that you know how to realize your best legal options for both of these areas of law. At the Packard Law Firm, we have a Board Certified bankruptcy attorney in both Social Security and Bankruptcy areas of law. If you are considering applying for Social Security or filing a Chapter 13 bankruptcy, we will be glad to help you understand your legal options.

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