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Social Security Benefits and Chapter 7

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    Social Security Benefits and Chapter 7

    From what I read online, if your monthly social security benefits are directly deposited to a separate account, the money becomes exempt
    if not co-mingled with other funds.

    If that is true, are there any reasons why doing that may not be a good idea?

    #2
    are there any reasons why doing that may not be a good idea?
    In a word, "NO".

    It is highly recommended that anyone who receives SS benefits, has those funds deposited into a segregated bank account. It is also highly recommend that the segregated bank account NEVER includes ANY funds not directly related to the deposit of SS benefits.

    Des.

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      #3
      Thanks, Des. I have another thought. If you are accumulating your SS benefits and not using these funds to pay for some of your expenses, couldn't the trustee say that you should be filing Chapter 13.

      Comment


        #4
        Originally posted by indianhead View Post
        If you are accumulating your SS benefits and not using these funds to pay for some of your expenses, couldn't the trustee say that you should be filing Chapter 13.
        Highly unlikely. I have had clients with thousands in their designated SS account. Since the funds are exempt from creditors they are also "exempt" from the eyes of a Trustee.

        As it relates to the monthly income for the ability to pay in a Chapter 13:

        At least the Fifth, Sixth, Eighth, Ninth and Tenth Circuits have concluded that social security income is not a factor in calculating “current monthly income” and therefore plays no role in calculating “projected disposable income.” for Chapter 13 purposes See In re Welsh, 711 F.3d 1120 (9th Cir. 2013); In re Cranmer, 697 F.3d 1314 (10th Cir. 2012); In re Ragos, 700 F.3d 220 (5th Cir. 2012); In re Carroll, 634 F.3d 327, 345 (6th Cir. 2011) cert. denied, 132 S. Ct. 997, (2012); and In re Thompson, 439 B.R. 140 (8th Cir. BAP 2010)***.
        In most instances Debtors include the monthly SS income on Schedule I for Chapter 13 purposes because, without it, the budget will show they cannot afford to keep/pay for what they are wanting to keep/pay for through the Plan.

        *** I copied this paragraph from an attny's website. The information contained therein is my understanding of the current status of the issue, especially as it relates to the reference to 9th Cir. law. You are in the 11th Circuit so you need to check locally to make sure Florida follows this approach.

        Des.

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          #5
          Des.

          Once again, many thanks.

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