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Bankruptcy and the Disabled

Those who are disabled and unable to work may find themselves in a tough financial situation. Though the federal government offers Social Security Disability support, this is only intended to cover basic living expenses. The high cost of medical care and the inability to work often lead to a high rate of debt.

How are Disability Benefits Viewed Under Bankruptcy Law?

Social Security Disability is only given to those who meet certain criteria, such as someone suffering from a critical medical condition that does not allow that person to work. Luckily, those who received Social Security Disability are protected under the Social Security Act from having their Social Security income levied, attached, or garnished in any way. Thus, the court could not allow creditors to take this income from you to pay outstanding debt.

How Can My Disability Benefits Affect My Bankruptcy Filing?

Though your Social Security income is protected from the reach of creditors, it can affect your bankruptcy case. Under Chapter 13 bankruptcy, if a person fails to pay their re-payment plan, a trustee can access the Social Security funds and consider it income. Under Chapter 7 bankruptcy, the Social Security income of the person filing is not taken into consideration. However, a median income test is run to determine how a person’s income compares with the state’s median income level for that person’s particular household. If the income level is the same or below the state’s median income level, that person could file for Chapter 7 bankruptcy which discharges debt. However, if they are above the state’s median income level, they may not qualify for Chapter 7.

How Do I File For Bankruptcy If I Receive Social Security Disability?

It is important to seek the advice of experienced bankruptcy attorneys like those at the Oswalt Law Group in Phoenix, Arizona, when considering filing for bankruptcy. With years of experience aiding those in bankruptcy proceedings, the Osawlt Law Group can help you with your unique case. With services including debt negotiation, collection defense, and advice on discharging your debt, the Oswalt Law Group can help you. Though bankruptcy can offer a “fresh start” by managing or completely discharging your debt, it is important to consider all options, including alternatives to bankruptcy. The Oswalt Law Group will look at your individual case and discuss the best options for you, taking into consideration your unique circumstances like Social Security Disability income. Contact the Oswalt Law Group today for a free initial consolation.

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