Social Security Disability

[sickandtired8]

Are they able to use your ss disability to make you pay some of your debt back with a Chapter 13? How long does it usually take from start to finish if you are allowed to do the Ch 7? Thanks! Sickandtired8

[lrprn]

Welcome to BK Forum! Glad you found us!

Are they able to use your ss disability to make you pay some of your debt back with a Chapter 13?

No. All Social Security benefits including disability are exempt (can't be taken) to pay your debts.

How long does it usually take from start to finish if you are allowed to do the Ch 7?

If your Ch 7 case is straightforward without any complications, about 4-5 months from filing to closing. However, any objections that are filed by creditors or the trustee or a motion to extend the time can make the case last longer - very rarely, a lot longer. That's why it's important to meet with a lawyer to see if your case is going to be straightforward or not. If it isn't, then you need an experienced bankruptcy lawyer to help you file for sure.

Again, welcome! Post questions, vent as needed, and share the good times here. We've all been where you are now in one way or another - you aren't alone in this.

[sickandtired8]

Red Flags

We did talk to a bankruptcy attorney and he said we could go with a Ch 7. My husband has had major surgery, my little girl has had 3 ER visits...febrile seizures and a broken arm...and now I have to have surgery. We have insurance which is the sad part! My husband became disabled after his surgery and we were living off credit cards and now the dr bills are coming and we had to borrow money from my parents to get gas to go for my surgery. I never ever thought I would be in a mess like this. We made good money when my husband was working. So his social security kicked in and we got a backpay check. We paid off 5 credit cards. I only work 2 days a week due to rhuematoid arthritis. So it looks like we will be doing the Ch 7 sometime in the near future. WHat would make a case complicated? I did ask the lawyer about pulling money out of my 401 K in order to pay the attorney fees. He didn't seem to think that would be a red flag. He said they just look at big deposits in your bank account. Does this sound right? Any other red flags? Thanks!

[DeadManCrawling]

If possible, take a LOAN against the 401(k) rather than a withdrawal.

An early withdrawal comes with penalties, where a LOAN does not, if paid back on the proper schedule. And a LOAN can be part of your bk, with required payments, at least in most districts.

best wishes,

-dmc

[SinkingFast]

We cashed out a Retirement IRA (rollover from a 401K) and it was considered income.

Don't pull any money out of your 401K. You'll have automatic 10% penalty for Early Withdrawal. Then, come tax time, you'll owe approximately another 10%-20% for taxes on the income.

Pay the attny in installments as you can. You need to put some time between filing and the cash payments you've made to the CC's.

The Trustee can go back after payments in excess of $600 paid to any unsecured Creditors within 90 days prior to filing. While the business part is between the Trustee and your Creditors, your case cannot Close until the Trustee recovers the money, waits for Creditors to file claims, and then distributes the money. It can tie your case up for quite some time.