Social Security in Bankruptcy - Total Bankruptcy
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Social Security in Bankruptcy

Thanks to decreasing employer-sponsored retirement packages (including pensions) and recent turmoil in the stock market (where many Americans invested their retirement savings), retired Americans may be relying more than ever on their Social Security benefits.

But what happens to Social Security in bankruptcy?

In most cases, Social Security funds cannot be seized by creditors, and are yours to keep even if you file bankruptcy. An attorney can explain how federal and state bankruptcy laws may help you secure a debt-free future.

Connect with an attorney today to begin the bankruptcy process. Simply fill out the form below to arrange a free, no-obligation bankruptcy consultation.


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Will I Still Get Social Security if I File Bankruptcy?

As this page will explain, filing for bankruptcy should not jeopardize Social Security payments.

Luckily, federal law protects Social Security benefits from various forms of collection, including:

  • Levy: When a creditor turns to court to collect a debt you owe, the court may issue a judgment against you. That judgment means that you are responsible for paying a certain amount of money related to the debt; however, creditors who have gotten judgments against you cannot levy that amount from your Social Security payments.
  • Garnishment: Another way some creditors choose to collect on debts is to attempt to garnish a person’s wages. This means that the creditor applies to get paid directly from a debtor’s employer, before the debtor ever sees that money. But Social Security benefits cannot be garnished by creditors.
  • Assignment by regular creditors: Similarly, the legal action of assignment (which basically means transferring one person’s property or money to another person) of Social Security payments is prohibited by regular creditors.
  • Bankruptcy trustees: A federally appointed trustee oversees every bankruptcy case in the U.S. Bankruptcy Courts. One of the trustee’s responsibilities is to approve the distribution of a filer’s property and money among creditors. But, thanks to federal law, bankruptcy trustees cannot approve the distribution of a filer’s Social Security benefits.

When Can the Government Withhold My Social Security?

If you’re considering filing for bankruptcy, your Social Security benefits are probably protected—unless you have certain types of debts. The government reserves the right to withhold Social Security payments for the following debts:

  • Taxes: If you’re behind on taxes, the government may have the right to withhold some of your Social Security to satisfy that debt.
  • Student loans: Similarly, federally backed educational loans may be subject to payment out of your Social Security if you’re unable to make payments otherwise.
  • Support or alimony: Falling behind on spousal or child support payments, too, may prompt the government to withhold some of your Social Security benefits to cover those payments.

Find out About Your State’s Bankruptcy Laws that Protect Social Security

In addition to the support from the federal government, each state has laws that determine what kinds of property can and cannot be collected to satisfy a debt. Many states have protections for Social Security on the books.

To find out more details about your situation and whether or not you might benefit from the protection offered by personal bankruptcy, consider speaking with a bankruptcy lawyer near you today.


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