Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

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Exemptions for income...

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  • Exemptions for income...

  • #2
    Here's a guy that got $18k from Social Security and the entire amount was exempt in bankruptcy.

    Can't get this link to work...

    Could someone receiving SS just let the account build up while spending down other assets and at the time of the Chapter 7 filing, exempt the account with the benefits in it?


    • #3
      We were able to exempt hubby's retirement account, which had at the time, over 70K in it.

      as far as the SS situation, if you just leave it in an account like that, I believe you have to have the exemption available to exempt it. I know social security cannot be garnished but I think if its in an account just sitting (like a savings account) it can be taken as an asset because its not being used monthly for your benefit. But dont quote me on it

      ETA: I cant get your link to work either - so I dont know if the 18K was backpayment for disability or if he received benefits monthly and saved them up. I believe therein lies the difference however; backpay cannot be taken if its disability - but if you save it up and not use it, then yes, I think it can be. But again, dont quote me as I'm not certain.


      • #4
        Looks like accumulated funds are exempt...

        Public benefits, including public assistance (welfare), social security, and unemployment compensation, accumulated in a bank account.


        • #5
          This is a change. 2008 this wasn't true.

          "We hold ... that since no provision in the Bankruptcy Code makes express reference to [section]407, and, without such express reference, that statute renders Social Security benefits, paid or payable, free from the operation of any bankruptcy law, a bankruptcy trustee has no authority to administer, as property of the bankruptcy estate, moneys paid to a debtor as Social Security benefits. In other words, such proceeds are not property of the bankruptcy estate," the court said.

          U.S. Court of Appeals, 8th Circuit Bankruptcy Appellate Panel. Carpenter v. Ries, No. 08-6046. July 13, 2009. Lawyers USA No. 993-962.


          • #6
            This deserves a sticky.


            • #7
              Originally posted by Skinsfan View Post
              This deserves a sticky.
              The reason this won't be a sticky is because the information here is already in multiple forums and because the bk exemptions vary from state to state and also change within each state periodically. Glad you posted your take on things as they are now though
              I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

              06/01/06 - Filed Ch 13
              06/28/06 - 341 Meeting
              07/18/06 - Confirmation Hearing - not confirmed, 3 objections
              10/05/06 - Hearing to resolve 2 trustee objections
              01/24/07 - Judge dismisses mortgage company objection
              09/27/07 - Confirmed at last!
              06/10/11 - Trustee confirms all payments made
              08/10/11 - DISCHARGED !

              10/02/11 - CASE CLOSED
              Countdown: 60 months paid, 0 months to go


              • #8
                Originally posted by lrprn View Post
                The reason this won't be a sticky is because the information here is already in multiple forums and because the bk exemptions vary from state to state and also change within each state periodically. Glad you posted your take on things as they are now though
                Disagree, respectfully. Yes, there is variability between states, although there is more similarity than variability. The fact that one can separate Social Security payments and let them accrue while they are planning a bankruptcy is not highlighted on this forum, whereas you have a lot of niche items in your sticky list.

                You do realize this ruling is from the summer of 2009? Previous to that, you could not allows public benefits and pensions to accumulate in a bank account and exempt them in bankruptcy.

                What about unemployment compensation? New York, Florida, California, Texas and I'm sure others allow these benefits to accumulate and pass through bankruptcy unscathed. I've read about tons of people receiving unemployment on this board trying to zero out their bank balances in anticipation of filing a Chapter 7, and just one reference to the idea of letting exempt funds accumulate.

                My $0.02.


                • #9
                  Originally posted by Skinsfan View Post

                  You do realize this ruling is from the summer of 2009? Previous to that, you could not allows public benefits and pensions to accumulate in a bank account and exempt them in bankruptcy.
                  It's a ruling in the 8th Circuit and therefore is only binding in the 8th Circuit. It can be used only as "pursuasive precedent" in other circuits. Judges in other circuits do not have to follow the ruling.
                  LadyInTheRed is in the black!
                  Filed Chap 13 April 2010. Discharged May 2015.
                  $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


                  • #10
                    Looks like I'm in the 4th, so I guess I'm SOL. Interesting spreadsheet.


                    • #11
                      I know this is an old thread. But I agree with Skinsfan...this should be a sticky! I was told I had to spend down account to $300, when in retrospect I could have already saved $3000 of unemployment.


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