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Social Security is a common concern among elderly people. Social Security is a crucial lifeline for many, regardless of whether the “they” are creditors or a bankruptcy trustee.
Our Social Security benefits are shielded against levies, garnishments, and assignments by common creditors under a universal federal statute. This means that no one, not even a creditor with a court order, can stop anyone from receiving Social Security benefits or take money away from someone once it has been deposited into one’s account.
Recent laws mandate certain actions that must be taken by a bank that receives a levy in order to prevent the payment of Social Security payments during a collection operation. By avoiding making any additional deposits into the account, we can make it simple to identify your Social Security income. Only use Social Security in that account.
If you reside or visit Los Angeles or Texas, Recovery Law Group is a recognised firm that can help you with any of your bankruptcy-related issues. You may reach them by phone at (888) 297-6203 or online at https://recoverylawgroup.com/bankruptcy/
Social Security in bankruptcy
In the event of bankruptcy, Social Security is still protected. Social Security-related funds are either excluded from bankruptcy estate ownership, according to various cases, or they never do.
Similarly, social security benefits are not included in the means test’s income computations. A 9th Circuit appeals court further ruled that the Chapter 13 good faith requirement did not mandate that debtors use their Social Security benefits to finance a reorganisation plan.
Except for the Federal Government
However, the federal government has the right to deduct a portion of Social Security benefits for taxes, school debts, or spousal support.
Added exclusions
Each state has a legislation that shields certain assets from the debtor’s creditors in addition to the federal exemption for Social Security benefits. The majority of pensions, 401(k) plans, and retirement plans are also excluded from collection prior to payout.
Avoid confrontation with pushy collectors
Collectors will use pressure, fear, and shame to persuade you to pay them if you fall behind on your payments, regardless of the other demands on your budget. However, older people and those with disabilities tend to be immune.