Swedishchef_small
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Bankruptcy and Social Security back payments

If I declare bankruptcy, I know that my Social Security Disability payments are off-limits to my creditors. Does that also apply to the SSI and SSDI back payments I've received since I was approved?

I wasn't approved until four years after I applied, so the SS Administration owed me a substantial wad of cash. That money is just sitting in my bank account as I gradually burn through it paying bills that aren't covered by my monthly check. I know that cash on hand isn't usually protected in bankruptcy, but it seems like if the cash was originally from SSA it would be protected. Does anyone here know for sure?

Second question, related:
If I don't bother to declare bankruptcy, could a court judgment make me forfeit SSI and SSDI back payments?

Here's a link to what I think is the relevant section of the Social Security Act:
http://www.socialsecurity.gov/OP_Home/ssact/title02/0207.htm

Valkyrie asked in Finance/Insure/Legal about 1 year ago | Report

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3 Answers

  • Avatar_default
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    When dealing with the government, you need an attorney. Protection can be had by hiring an attorney to establish a discretionery Trust for yourself, and re-titling all assets, including your cash account, to the Trust. But the key to actual protection is use of an attorney. To find one in your area, go to your local Bar Association website. BTW, I am not an attorney, nor do I represent or work in the legal field; but the court system is set up to make use of attorney representation to streamline & representing yourself would cost you far more, in the long run.

    isn answered in Finance/Insure/Legal about 1 year ago | Report
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  • Tomato_small
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    Valkyrie, are you in or near King County? If so, you should make an appointment with the Neighborhood Legal Clinics' debt and bankruptcy clinic.

    http://www.kcba.org/legalhelp/nlc/clients.aspx

    Did you retain an attorney to help get approved for SSA benefits? If so, that attorney should be able to answer your question and advise you on what to do with your back payment funds.

    You will want to speak with and hire a bankruptcy attorney at some point if you go that route, so it's probably a good idea also to start researching so you can find one who is (a) good and (b) inexpensive.

    Good luck.

    Luckier answered in Finance/Insure/Legal about 1 year ago | Report
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  • Bauhaus_small
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    No one can garnish SSI and no one except the Federal government can garnish SSDI, and that won't happen unless you default on student loans or owe the government some other type of money. Check with legal aid if you want or even the SSA hot line, but that money sitting in the bank isn't "cash on hand." It's four years worth of SSI and SSDI payments that you are entitled to use to get caught up financially for those 48 months wherein you had no income.

    Bauhaus answered in Finance/Insure/Legal about 1 year ago | Report
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