Many people looking at filing bankruptcy often have social security as a source of income and are scared to lose it. While creditors like to scare people into thinking they will lose all their money if they don’t pay back a debt, social security is in fact exempt from almost all creditors, with the federal government being the one exception. (Source 1, Source 2, Source 3).
That same exemption on social security applies in bankruptcy. A United States Trustee cannot garnish or take social security from the debtor to repair any creditors. In fact, some cases say that social security does not even become part of the bankruptcy estate. (Source 1).
What does all this mean if your only source of income is social security? It may mean that if your only source of income if social security, that filing a bankruptcy is not necessary. A creditor may be able to obtain a judgment against you in court, however they will not be able to collect anything from you if your only source of income is social security. Again, if the creditor is the federal government then they may be able to collect some of your social security income (Source 1, Source 2, Source 3).
With creditors calling and threatening to take the assets of debtors frequently, debtors need to be armed with the correct information as to what creditors can actually take. If creditors are calling or harassing you, give Finegan & Rinker a call to see if a bankruptcy makes sense and what assets you have that a creditor can actually get to.