Social security income

Letter to “Ask Leon”

Are social security benefits included in the chapter 7 means test to count as income if there are wages earned (above $25,000/yr) Also, in chapter 13, are SS benefits received counted as income to determine disposable income?

Leon Says…

Your Social Security will not be counted as income for purposes of eligibility under the “means test” for Chapter 7 and 13. However, the law is still so new that we do not yet have definitive court rulings as to whether or not your SS will be counted as income for determination of “good faith” in Chapter 13. In Chapter 7, the court probably will consider your SS for purposes of determining whether or not your filing is an “abuse” of the law. In other words, the court asks, “Are you filing even though you could really afford to pay your debts?” A case may be dismissed as an “abuse” even though you pass the means test. See: http://www.debt-relief-bankruptcy.com/faq-browse11-8/bankruptcy-guide.asp