Typically you are going to have an individual who is working every month and out of his pay check there is this long-term disability premium that is being taken out. Then something happens and it renders this worker unable to work any longer. He is disabled. He starts to receive his long-term disability checks. He applies for social securty disability as well and that gets held up in the system for many months. Finally when he does get his check for social security disability they include a portion of back pay that represents some of the time that he was waiting while he was disabled.
Next, you get a letter from the long-term disability company saying that back pay check should be ours and they want you to endorse it over to them. These individuals, if they have to file a bankruptcy, and they have these debts that they simply cannot pay, they need to know that that claim for social security back pay from the long-term disability company, is dischargable in bankruptcy. That debt can be wiped out. Your back pay is exempt money. It is yours. Social security is exempt in bankruptcy in just about every state in the country, certainly Texas.You are entitled to keep your social security benefits in a Chapter 7.
If you are in the situatuion where you simply don't have enough money to satisfy all of your creditors, and your long-term disability is trying to take your social security back pay, give us a call and we can help you sort that out.