Bankruptcy & SSDI - NEW INFO!!

Discussion in 'Fibromyalgia Main Forum' started by meditationlotus, Aug 15, 2009.

  1. meditationlotus

    meditationlotus New Member

    A few days ago, I posted that I had called Allsup, and they told me they couldn't represent me because I am in the middle of Bankruptcy and they're afraid they won't get paid.

    I ran across this new ruling posted on a message board regarding this very thing:

    Can't loose your SS check in a bk case

    July 27, 2009

    You Can’t Lose Your $17,165 Social Security Check in a Bankruptcy Case, Appeals Court Says
    By Craig Andresen, Attorney at Law on Jul 27, 2009 in Bankruptcy Cases & Legislation, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Exemption Issues, Means Testing

    According to the Eighth Circuit Bankruptcy Appellate Panel, a bankruptcy debtor cannot lose social security benefit payments in a bankruptcy case, even the money is paid as a $17,165 lump sum for past benefits. In re Carpenter, No. 08-6046 (8th Cir. BAP July 13, 2009), held that section 407 of the Social Security Act excludes such payments from the bankruptcy estate. Under the logic of this decision, social security payments of any kind are excluded from the bankruptcy estate in either chapter 7 or chapter 13 cases, and the debtor can keep this money without even needing to claim it as exempt.

    The debtor in Carpenter had received $17,165 as a retroactive social security disability benefit. He placed the funds in a segregated bank account and later converted the money into a cashier’s check. Several months after receiving the money he filed chapter 7. The bankruptcy court ordered him to turn the social security money over to the trustee, but the appeals court reversed, holding that section 407 specifically overrode any bankruptcy statute suggesting that such funds belonged to the trustee.

    Under this decision, it doesn’t matter what state the bankruptcy is filed in, because the funds don’t have to be claimed as exempt. The fact that the funds are from social security excludes them from the reach of any bankruptcy trustee.

    It is important to note that section 707(b)(2) of the bankruptcy law (the “means test”), as well as section 1325(b)(2), exclude social security payments from consideration in a debtor’s budget in either chapter 7 or chapter 13. This means that social security benefits ought to be excluded from consideration in any consumer bankruptcy case, whether as an asset of the estate, or as income for the chapter 7 means test, or as income for funding a chapter 13 plan. It even should excluded from consideration for section 707(b)(3) motions, where the U.S. Trustee attempts to force debtors to convert to chapter 13, since the money can’t be used for creditors anyways under section 1325(b)(2).

    In re Carpenter is an important reminder that courts should exclude social security payments from consideration in any consumer bankruptcy case.

    By Craig Andresen, attorney at law

    This is great news, but apparently Allsup isn't aware of it. Thought I would post this for anyone going through a similar situation.


    [This Message was Edited on 08/15/2009]
  2. meditationlotus

    meditationlotus New Member

    8th Circuit Bankruptcy Appellate Panel says Social Security payment protected from bankruptcy
    By Murphy, Pat
    Publication: Lawyers USA
    Date: Tuesday, July 14 2009

    A debtor's bankruptcy estate did not include a lump-sum payment of retroactive Social Security benefits, the 8th Circuit Bankruptcy Appellate Panel has ruled in reversing judgment.

    The debtor received a $17,000 payment for retroactive Social Security disability benefits about six months before he filed for bankruptcy.

    He claimed that those funds - which he maintained segregated from his other assets - were exempt from his bankruptcy estate under [section]522(d) of the Bankruptcy Code.
    That provision allows a debtor to claim as exempt "the debtor's right to receive ... a Social Security benefit"

    The bankruptcy trustee argued that [section]522 did not apply because, rather than the debtor having a "right to receive" the benefits, the benefits had already been paid.
    The court agreed that the debtor could not claim the [section]522 exemption, but nevertheless concluded that the benefit payment was exempt pursuant to [section]407(a) of the Social Security Act.

    "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.

    Credit: Pat Murphy

    [This Message was Edited on 08/15/2009]
  3. meditationlotus

    meditationlotus New Member

    for official ruling. "Bankruptcy & SSDI - OFFICIAL RULING"