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Is my monthly social security disbursement considered “income” when filing for Chapter 7 bankruptcy?
23 January 2013

When filing for Chapter 7 bankruptcy, debtors must complete a means test to determine whether they qualify for this type of bankruptcy. The test generally determines whether the debtor has enough income to pay back their creditors.

Case law has determined that Social Security income is not considered income for the purposes of the means test. Thus, you are not required to report Social Security income for mean test purposes, that is, to determine if you are eligible to file for Chapter 7 bankruptcy.

However, although Social Security income is not considered income for the purposes of the means test, you must still report this income on Schedule I (Current Income of Debtors) of your bankruptcy petition. Since it is reported on Schedule I, it will affect your monthly disposal income on Schedule J, and may cause an inability to file for Chapter 7 bankruptcy relief.

The process of filing for bankruptcy relief is riddled with sensitive deadlines and legalities. Further, adding the complexities of accurately determining what constitutes “income” to meet qualification requirements is crucial and must be correctly done. Failing to do so may expose a debtor to filing for bankruptcy relief and later having the case dismissed without a discharge. Such dismissals cause unneeded legal expenses, court costs, time, and other grave unwanted legal consequences. Please contact our office to schedule to obtain the experienced assistance of attorney, Gregory E. Nassar.

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