Can you keep social security disability after filing Chapter 13 bankruptcy? 11 Answers as of June 01, 2011

My friend is not computer savvy and I am asking this question for her. She has a current Chapter 13 has paid for 8 months, she is now behind two payments. She was awarded Social security disability and received a lump sum about a month ago. The lump sum she was going to use to pay off the car and she has need of expensive dental work. So she is considering doing a conversion to a CH7 and surrendering the home. But she wishes to know, can she keep this lump sum? Should she do a modification of the 13 and surrender the home and lower the monthly payment to the BK trustee and continue the 13 to the end? She does not have an attorney as the attorney she did have has move out of state. Any suggestions of the path she should take are more than welcome. She feels that she will lose her SSD lump sum will be taken by the BK trustee. So I am trying to give her the state’s law on this subject and how she can keep this lump sum.

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Dearbonn Law Offices
Dearbonn Law Offices | Ajibola Oluyemisi Oladapo
Social security disability is exempt in WA state where I practice, if she lives in WA she can keep her social security disability after filing BK. Federal law, U.S.C. title 11 also exempts SSD. If she lives in another state i suggest she consults with a BK attorney in that state to determine if SSD is exempt.
Answer Applies to: Washington
Replied: 6/1/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
She needs a bankruptcy lawyer to advice her and a friend to hold her hand and not get her in trouble by giving her wrong advice. That would be a quick way to lose a friend and be sued for practicing law without license and if she loses her benefits.
Answer Applies to: California
Replied: 5/31/2011
Saedi Law Group
Saedi Law Group | Lorena Saedi
Your friend needs to retain the services of a local attorney in this case. She has many issues going on and I would not suggest moving forward without one.
Answer Applies to: Georgia
Replied: 5/31/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
This is an area in which to use extreme caution. The social security proceeds are protected by federal law 42 USC 407(a) but many courts have held that the proceeds lose their protection if comingled with other non-protected assets.
Answer Applies to: Indiana
Replied: 5/31/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Her lump sum social security is safe.... she needs to keep it in a bank account segregated from any other monies she has. If otherwise eligible she can convert to chapter 7.
Answer Applies to: California
Replied: 5/31/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    SSI disability is protected from taking under federal law. The Debtor can convert to Chapter 7 and surrender the house without having to surrender the disability income. However, if under Chapter 13, the Debtor must obtain permission from the court to sell an asset of the bankruptcy. It's better to convert to chapter 7, then wait for the discharge and either short sell or foreclose on the property. Debtor should not move out until the last minute.
    Answer Applies to: California
    Replied: 5/31/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    If she converts the Chapter 7 bankruptcy trustee cannot take her lump sum social security disability. She should take the amount of money she got and move it into a separate account so she can point to it and say, this is my social security disability payment.
    Answer Applies to: Virginia
    Replied: 5/31/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    The attorney who started the case is required by law to help her unless the court allows the lawyer to withdraw. Given what is at stake. your friend should not proceed pro se as any misstep could be financially catastrophic. Please note that your helping her as to legal advice is a crime in Georgia and may harm her, as she needs a lawyer to determine if conversion or modification is possible or desireable. Help her by finding her good counsel.
    Answer Applies to: Georgia
    Replied: 5/31/2011
    Daniel Hoarfrost, Attorney at Law
    Daniel Hoarfrost, Attorney at Law | Daniel Hoarfrost
    Your friend would not have to turnover her SSD. I can't answer the rest of your question about her house without asking her a few questions.She's welcome to call my office for a brief, free phone consult.
    Answer Applies to: Oregon
    Replied: 5/31/2011
    Jackson White, PC
    Jackson White, PC | Spencer Hale
    My advice is for her to find a new attorney. Your friend has a lot of options. She could convert to a chapter 7 as you suggest (provided she qualifies). She could modify the plan to account for the increased medical expenses. Depending how high the medical bills are, she may even ask for a moratorium. She does not necessarily have to lose the house. She should talk to an attorney.
    Answer Applies to: Arizona
    Replied: 5/31/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Social security disability payments are wholly exempt in or out of bankruptcy. Whether she should file a Chapter 7 or remain in Chapter 13 requires looking at all the facts as well as the legal effect of the decision. You should consult an attorney who specializes in bankruptcy law in order to make that determination. This is not a situation where someone should represent herself.
    Answer Applies to: California
    Replied: 5/31/2011
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