Bankruptcy and Disability Benefits: What You Should Know
Bankruptcy misconceptions are plentiful, whether you are looking for information on websites or speaking to friends and family members about your financial situation. We often speak with consumers who are under the assumption that a Chapter 7 bankruptcy case will result in the loss of all of their property, and that they could lose eligibility for certain government benefits they receive. Many debtors also have incorrect information about the differences between Chapter 7 and Chapter 13 bankruptcy, and they assume that any kind of consumer bankruptcy involves a liquidation of assets. For debtors who currently receive disability benefits, it is critical to understand how the consumer bankruptcy process will—and will not—affect your disability payments. Our experienced Oak Park bankruptcy lawyers can tell you more.
Disability Benefits and Eligibility for Bankruptcy
Some types of disability benefits will count toward your income when you are determining your eligibility for bankruptcy. For Chapter 7 bankruptcy, you will need to be aware of the ways that some disability payments, especially lump-sum payments, could make it look like your income is too high for you to qualify for Chapter 7 bankruptcy. When it comes to Chapter 13 bankruptcy, you will need to be able to show you have an income that will allow you to make regular payments on your bankruptcy plan for the next several years. Some types of disability can count toward your income, but those payments may not be enough to make you eligible for Chapter 13 bankruptcy.
Generally speaking, disability benefits from federal programs like the Social Security Disability Insurance (SSDI) program or Supplemental Security Income (SSI) through the Social Security Administration (SSA), as well as disability benefits through the Veterans Administration (VA), do not count as income for purposes of determining eligibility for Chapter 7 bankruptcy under federal law. Yet you may be able to have your disability payments considered when it comes to your ability to make payments on a Chapter 13 plan and to be eligible for Chapter 13 bankruptcy.
However, certain disability benefits from private insurance and other programs are not typically treated the same way as federal benefits. These disability benefits may be counted as income and could prevent you from qualifying for Chapter 7 bankruptcy. You should also know that lump-sum SSDI or SSI payments can complicate matters and may not be fully protected or exempt.
Keeping Your Disability Payments as Exempt Property
Under Illinois bankruptcy exemption laws your federal disability benefits will likely be considered exempt, with the same exceptions for some lump-sum payments. What this means is that you will not have to worry about those disability benefits being liquidated in order to repay creditors—you will be able to keep your benefits. You should know that the HAVEN Act recently included disability benefits through the VA in this exempt category, so any older materials you find will not provide you with accurate information about the disability benefits you may be receiving as a veteran.
Private disability benefits, however, may not be exempt. You should have a bankruptcy lawyer assess your case to determine whether private benefits could be subject to liquidation in a Chapter 7 bankruptcy case.
Contact Our Oak Park Bankruptcy Attorneys Today
Whether you want to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, and whether you receive SSDI, SSI, or another type of disability benefit, you should be sure to discuss the specific facts of your case with an Oak Park bankruptcy lawyer. Contact the Emerson Law Firm today.
See Related Blog Posts:
Can I File for Consumer Bankruptcy Even if I am Unemployed?
Asset Protection in Your Bankruptcy Case
Disability Benefits and Eligibility for Bankruptcy
Some types of disability benefits will count toward your income when you are determining your eligibility for bankruptcy. For Chapter 7 bankruptcy, you will need to be aware of the ways that some disability payments, especially lump-sum payments, could make it look like your income is too high for you to qualify for Chapter 7 bankruptcy. When it comes to Chapter 13 bankruptcy, you will need to be able to show you have an income that will allow you to make regular payments on your bankruptcy plan for the next several years. Some types of disability can count toward your income, but those payments may not be enough to make you eligible for Chapter 13 bankruptcy.
Generally speaking, disability benefits from federal programs like the Social Security Disability Insurance (SSDI) program or Supplemental Security Income (SSI) through the Social Security Administration (SSA), as well as disability benefits through the Veterans Administration (VA), do not count as income for purposes of determining eligibility for Chapter 7 bankruptcy under federal law. Yet you may be able to have your disability payments considered when it comes to your ability to make payments on a Chapter 13 plan and to be eligible for Chapter 13 bankruptcy.
However, certain disability benefits from private insurance and other programs are not typically treated the same way as federal benefits. These disability benefits may be counted as income and could prevent you from qualifying for Chapter 7 bankruptcy. You should also know that lump-sum SSDI or SSI payments can complicate matters and may not be fully protected or exempt.
Keeping Your Disability Payments as Exempt Property
Under Illinois bankruptcy exemption laws your federal disability benefits will likely be considered exempt, with the same exceptions for some lump-sum payments. What this means is that you will not have to worry about those disability benefits being liquidated in order to repay creditors—you will be able to keep your benefits. You should know that the HAVEN Act recently included disability benefits through the VA in this exempt category, so any older materials you find will not provide you with accurate information about the disability benefits you may be receiving as a veteran.
Private disability benefits, however, may not be exempt. You should have a bankruptcy lawyer assess your case to determine whether private benefits could be subject to liquidation in a Chapter 7 bankruptcy case.
Contact Our Oak Park Bankruptcy Attorneys Today
Whether you want to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, and whether you receive SSDI, SSI, or another type of disability benefit, you should be sure to discuss the specific facts of your case with an Oak Park bankruptcy lawyer. Contact the Emerson Law Firm today.
See Related Blog Posts:
Can I File for Consumer Bankruptcy Even if I am Unemployed?
Asset Protection in Your Bankruptcy Case
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