How Does Social Security Affect Chapter 13 Bankruptcy?

Your Social Security income can have a significant impact on Chapter 13 bankruptcy filings. Before you file, it is important that you have a basic understanding of the impacts your Social Security income may have on your Chapter 13 plan. Make sure you have all of the facts so you can make the process as smooth as possible.

You can receive Social Security income if you are retired or if you have become disabled. When you work at a job that withholds Social Security taxes from your wages, that amount is kept in a special fund until you either file a claim or become of retirement age. In either case, Chapter 13 bankruptcy filings can be affected by your Social Security income.

Chapter 13 bankruptcy is a plan you submit to the federal bankruptcy court that establishes how you intend to reorganize your finances and your owed debts. The court looks at a multitude of factors and then approves or denies your filing. If you receive Social Security income, this will be considered along with any other income that you earn.

When the federal bankruptcy court looks at the Chapter 13 plan you submit, all of your income including Social Security payments is included in the income totals. Your full income total helps the court to decide whether your Chapter 13 plan will have a duration of three or five years. Depending on your income and expenses, you may be able to qualify for a shorter term on your bankruptcy case.

The federal bankruptcy court will also receive a detailed report listing your necessary expenses against your total income, including your Social Security. Once your expenses are subtracted from your income, the remaining amount is what will most likely be established as your required payment for your Chapter 13 plan.