Social Security in the Bankruptcy Chapter
To understand the benefits of social benefits to a debtor, you need to look it at bankruptcy. However, one experience a lot of trouble if they have social security benefits prior to filing for bankruptcy. The exemption and protection of social security is dictated by the federal law and the bankruptcy courts. So, you should understand that the trustee has no right deny you the ongoing social security benefits. Protection is provided to social security benefits applied before you file for bankruptcy.
Nevertheless, the trustee might claim that you should not be exempted from any funds if you commingle non-Social Security funds with these benefits. I is easy to lose the entire funds if you mix social security benefits with other funds. How lenient your trustee will be in looking at your social security benefits will determine if you are protected or not. The social benefit account should not be combined with other funds.
When you separately keep social security benefit from another account, the trustee will be convinced that they are protected. If you make a mistake of depositing even a single dollar in the account the trustee will argue that you cannot separate Social security funds from other funds. Bankruptcy exemption such as cash on hand can help you to social funds commingle with other funds. The Retroactive can also be protected by the federal law.
Nevertheless the same standards also apply when it comes to mixed funds. Trustees will argue that the funds are not protected if you deposit lump sum security payment to other funds account. The likelihood of the trustee to argue that the lump sum is in the bankruptcy estate will be determined by how big the potential payoff is. A trustee benefits more from trying to represent the interest of a creditor who has social security payment commingled with other funds. You need to ensure that your Social security are separate from the other account in order to be able to show the court that your account are protected.
By any chance a person find himself bankrupt the trustee will take his properties and the creditor will be unable to act for their debts. It is possible for a creditor to claim proof with the trustee. As long as this is accepted by the trustee, payments can be made to the creditor via dividends. A person who is discharged from bankruptcy is released from all debts even if they are not proven. The only exception is when the debt was obtained through fraud. All debts in bankruptcy including social treatment are treated in the same way. The entire recovery action is stopped immediately a person who is who has a social security debt is declared bankrupt. Social security payment, legal proceedings cannot be easily pursed if the debtor is declared bankrupt. A debtor should always be repaid if money is paid towards him after he has been declared bankrupt.