Is Social Security Excluded from Disposable Income in Chapter 13 Bankruptcy?

  • Chapter 13 Bankruptcy

Is Social Security Excluded from Disposable Income in Chapter 13 Bankruptcy?

Call: 888-297-6203

According to the ruling of the Fourth Circuit, people who file for Chapter 13 bankruptcy do not need to include social security as part of their disposable income. This is a huge relief say lawyers of Dallas based bankruptcy law firm Recovery Law Group as the social security income can be saved and you might have surplus income after paying expenses and all planned payments as part of the repayment plan.

Most states are undecided with respect to the inclusion of social security in your disposable income during a Chapter 13 bankruptcy. Despite bankruptcy code stating that social security should not be included for disposable income calculation, many bankruptcy courts dismiss the Chapter 13 repayment plan for not including social security income as being proposed in ‘bad faith’.

The fourth Circuit’s decision is a welcome breath of relief for residents of Maryland, North and South Carolina, Virginia and West Virginia. The court ruling is in accordance with the bankruptcy code’s exclusion of social security income. With this decision, they have joined the Fifth, Sixth, Eighth and Tenth circuits.

The landmark decision makes it optional for people to include their social security income in their Chapter 13 repayment plan. However, you need to discuss this with your lawyer. In case you haven’t hired one, you can call 888-297-6023 to discuss your case.