Social Security Benefits Exempt from Chapter 13 Payments, Middle FL

[rta]

This is great news and makes things so much clearer. Now just to make sure, does this apply to Chapter 7 cases, too? I plan to file for Chapter 7 and have the impression that SS income must be included in the Schedules (I and J, I believe). Would the new decision(s) now mean that I can exclude this income from the schedules?

Just wondering. Hope I'm not being redundant. Thanks for reading.

[HHM]

Strictly speaking, how you do it is this.

1. You exclude the income on the Means Test (Form B22), so you don't even count.
2. You DO put the SSI on Schedule I (income)
3. But, you back it out on Schedule J (expenses) by listing at as Exempt SSI in "Other Expenses"

[rta]

Thanks for the detailed instructions. It's good to know these things.

What I'm now confused about is whether SS retirements benefits are not included here. SSI and SSDI are not quite the same. Also, even if you receive SSDI, once you reach retirement age, it rolls over into ordinary SS benefits. Clear as mud, I know.

What I have is SS retirement benefits. If my application for SSDI is approved, I suppose it will be called SSDI. And when I reach full retirement age, it will be considered SS retirement benefits. Are these all not to be included in BK, schedules and all?

Thanks!

[justbroke]

If you read 11 USC 101, you will see the definition of Current Monthly Income. It only reads benefits from the "Social Security Act". It has to do with ALL benefits paid by/through or because of the Social Security Act. There is no mention of SSDI, SSI, or SS since they are all benefits of the Social Security Act.

11 USC 101... but excludes benefits received under the Social Security Act,

[rta]

Thanks. I need to do a lot of careful reading.

[MSbklawyer]

Yesterday, the 5th Circuit Court of Appeals issued an opinion to the effect that Social Security is NOT included in projected monthly income.

This is now the majority position.

http://www.ca5.uscourts.gov/opinions/pub/11/11-31046-CV0.wpd.pdf

[woeisme]

So does that mean my CH 13 judge owes me 39K back since he included my son's survivor benefits in my disposable income for the past 60 months? or my lawyer for including it? oh to dream, lol.

[catleg]

Hi gang, I've been looking into this issue myself and am looking for any insight into the following situation:
--I have become fully disabled since filing ch 13 and getting plan confirmed.
--my income has changed from wages to disability payments (SSDI + private insurer) which is 100% exempt by NJ BK code
--my wife still works but exempting my income we should have a negative schedule I/J result upon the conversion
Plan to talk to the lawyer next week, hoping to convert if we can.

This is the relevant NJ statute:
17:18-12. Disability benefits not liable to execution, attachment, garnishment, etc.; rights of creditors
No money or other benefit paid, provided or allowed to be paid, provided or allowed by any stock or mutual life, health or casualty insurance corporation on account of the disability from injury, or sickness of any insured person under any policy of insurance, whether heretofore or hereafter issued, shall be liable to execution, attachment, garnishment, or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law, to pay any debt or liability of such insured person whether such debt or liability was incurred before or after the commencement of such disability, but this section shall not affect the assignability of any such disability benefit otherwise assignable, nor shall this section apply to any money income disability benefit in an action to recover for necessaries contracted for after the commencement of the disability covered by the disability clause or contract allowing such money income benefit. ....

[justbroke]

A Chapter 13 is special. While it can't be used in the determination of current monthly income (CMI), you could actually use it to fund a Chapter 13. If you are only in a Chapter 13 because you had enough DMI to fund a Chapter 13, then certainly talk with your attorney about conversion! If you entered into a Chapter 13 to save property, you'll have to make some decisions.

[catleg]

Yeah we were just BAPCPA victims.

What's interesting is that apparently the debtor must choose between the NJ and federal exemptions. I'd say 99% of debtors use the federal exemptions here. My wife and I split our cases because of the ch 13 debt limit so it's going to be interesting. Luckily the house is in her name although I don't think there's any equity, this way we don't get caught in a dispute with the ch7 trustee over any asset there. Hope we don't get tossed any other curve balls. Looking in Pacer the only reasons I see most 13-7 conversions failing is either a prior 7 too close together or failure to complete the courses.

Luckily the disability exemption is by statute in NJ so it shouldn't go to appeal on "bad faith" or whatever the UST dreams up.