Is My Social Security Protected If I File For Bankruptcy in Alabama?

So you’ve reached a point in your life where you can finally collect Social Security benefits. But you’ve also fallen into debt and may now need to file for bankruptcy. While this is certainly a tough spot to be in, the good news is that Social Security benefits are generally exempt from bankruptcy, according to the Social Security Administration (1).

Basically, what that means is that if you were to file for bankruptcy protection in Alabama, the court likely wouldn’t take the money you receive from Social Security. Of course, it is always a good idea to consult with an Alabama bankruptcy lawyer first before assuming you’re exempt from having your Social Security benefits taken.

What types of bankruptcy can I file for if I receive Social Security benefits?

If you collect Social Security benefits, that doesn’t exactly exclude you from filing for certain types of bankruptcies. You can still file for Chapter 7 or Chapter 13 bankruptcy, given either suit your needs. If you decide to file for Chapter 7 bankruptcy, you’re essentially agreeing to have some of your assets liquidated, and use the proceeds to satisfy your unpaid debt.

In the event your assets aren’t enough to pay off your creditors, the remaining amount may be discharged. This means you would no longer be liable for paying it back. Of course, the debt must qualify for discharge in order for the court to “erase” it. Certain types of debt, including taxes and child support, cannot be discharged.

Chapter 7 bankruptcy is among one of the more popular types of bankruptcies individuals rely on as it provides them with a clean slate to work with once they exit bankruptcy.

How does Chapter 13 bankruptcy work?

Another common type of bankruptcy individuals file for is Chapter 13. If you aren’t looking to liquidate debt and potentially lose certain property, Chapter 13 bankruptcy is another option to consider.

With this type of bankruptcy, your debt isn’t being forgiven, rather it is being reorganized. You would be required to work with the bankruptcy court to establish a repayment plan that would allow your creditors to get repaid. Your income and debt amount would be used to determine how much you can pay each month.

It is worth noting that the court does set certain limits on the amount of debt you can have if you wish to file for Chapter 13 bankruptcy, and an Alabama bankruptcy attorney would be happy to explain to you what these are.

There are a few other types of bankruptcies that exist, though most are used for certain types of entities, including businesses.

Ready to get your debt under control?

Now that you know Social Security benefits are generally protected from being liquidated in bankruptcy, you might be interested in learning more about the process. Whether you’d like to wipe your slate clean or set up a repayment plan, an Alabama bankruptcy lawyer can help.

Hill, Gossett, Kemp & Hufford, P.C. is a bankruptcy law firm located in Alabama with locations in Moody, Leeds, and Springville. If you think bankruptcy might be a suitable option for you or aren’t sure whether you make for a good candidate, contact Hill, Gossett, Kemp & Hufford, P.C. to speak with one of their legal experts.

Have questions about this article or a legal concern? Call 800-672-3103

Disclaimer: No representation is made that quality of legal services provided is greater than the quality of legal services provided by other attorneys.

Hill, Gossett, Kemp & Hufford, P.C. can be reached at:

Moody Office

2603 Moody Parkway, Suite 200

Moody, Alabama 35004

Phone: (205) 640-2000

Website: www.hwhlawgroup.com

Leeds Office

7900 Parkway Drive

Leeds, AL 35094

Phone: (205) 699-5500

Springville Office

6441 U.S. Highway 11