This is what I have found so far regarding Social Security and Bankruptcy based on my own research. It may or may not help you (these are based on MY opinions and interpretation):
Social Security Act : Sec. 207. [42 U.S.C. 407]
(a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.(b) No other provision of law, enacted before, on, or after the date of the enactment of this section[97], may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
(c) Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986[98] by the person entitled to such benefit or such person's representative payee.
If you think about it, it doesn't make sense that the benefits are not subject to execution by creditors, but can be used to help pay back debt in a chapter 13 plan. Therefore, if you look at it in respect to that, they really are being used in execution for a creditor. hmmm....
Form B22A (means-test) line 10 "Do not include any benefits received under the Social Security Act"
USC title 11 chap1 § 101 (10A)(B)
10A) The term "current monthly income"--
(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor's spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on--
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and
(B) includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor's spouse), on a regular basis for the household expenses of the debtor or the debtor's dependents (and in a joint case the debtor's spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism (as defined in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status as victims of such terrorism.
And...
USC title 11 Chap 13 § 1325 (b)(2)
the term “disposable income” means current monthly income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable nonbankruptcy law to the extent reasonably necessary to be expended for such child)
One of the arguments that I found was stating that CMI is used to determine the payback in a 13, but SS is excluded from CMI according to:
§ 707(b)(2)(A) and (B)
(iv) The presumption of abuse may only be rebutted if the additional expenses or adjustments to income referred to in clause (i) cause the product of the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be less than the lesser of--
Doesn't this show that by stating that the presumption of abuse can only be rebutted if the CMI is too high? It looks to me that the CMI as explained in both USC title 11 Chap 13 § 1325 (b)(2) and USC title 11 chap1 § 101 (10A)(B) does NOT include disability. Which would mean that they could not use the presumption of abuse to push us into a 13.
Also, I found this memo (based on a Utah case, where I am) which could be an argument against our case, but there are a few things that actually might help us:
I noted the following that may or may not help:
The trustee orginally objected because although the debtor did not include SSI as income, but he used it as an expense.
(I wonder if we added it in and then exempted it out, if that would help) Also, I think the judge was more critical because in the case, it is clear that they were amending things to "hide" the SS.
Page 3:
The Debtor also argues that previous decisions which included SSI as part
of § 1325(b)(2) “disposable income” did so based on the voluntary filing of a chapter 13;
**You can argue that it is always voluntarily because you make the choice to convert to a 13, rather than dismiss a 7 - BUT, you can also argue that there was no other option but to file a 13 (see the 8th circuit case)**
Page 6:
There is no dispute that SSI is statutorily excluded from both the calculation of CMI
under § 101(10A) and the calculation of DI under § 1325(b)(2) as both calculations are
determined by using Form 22C. However, the Tenth Circuit Court of Appeals (“Tenth Circuit”) in In re Lanning7determined that CMI and DI calculations are different than the calculation of
PDI found in § 1325(b)(1)(B)8
Page 9:
In Re Koch - The Court concluded that the exempt income should also be included in the substantial abuse determination because “Congress is free to limit chapter 7
protection to truly needy debtors who cannot fund a chapter 13 plan with exempt and non-exempt income.”26
(sites ID at 1290) How can this be used to supercede any of the existing statutes, especially the Social Security act? Also, what is the definition of non-exempt in this? Couldn't that be interpreted as too broad? I would think that they would have needed to include SS in this statement by name because they would have to "supercede" the SS act in order to make this statement true. Aren't there several types of "exempt" income, that don't have the protection of the SS act?
Page 10:
There are some post-BAPCPA cases which have taken the view that SSI should be excluded from PDI based on the definition of DI from § 101(10A).31
See In re Wilson, 397 B.R. 299, 319 (Bankr. M.D.N.C. 2008) (social security income of
the Debtor’s non-filing spouse will not be included in the determination of the Debtor’s income for purposes of Section 1325(b)(1)(B)). In re Upton, 363 B.R. 528, 535 (Bankr. S.D.Ohio 2007)(consideration of benefits received under the Social Security Act is inappropriate for determining projected disposable income). In re Ward, 357 B.R. 741, 745 (Bankr. W.D.Mo.2007)(the debtor is correct that her social security income is not required to be included in theanalysis of whether she is contributing all of her projected disposable income to her plan but social security income must be included on Schedule I so parties can consider whether plan is filed in good faith). But see In re Calhoun, 396 B.R. 270, 276 (Bankr. D.S.C. 2008)(in § 707(b)(3) context, it is not proper to report and subtract social security income to shield from creditors because Congress knew how to exclude benefits when writing BAPCPA).
Page 12:
Here, even with the exclusion of SSI on Form 22C, the Debtor is an above median
income debtor as his CMI is above Utah’s median income for a family of two
(we are still below median income with the exclusion)
Page 15:
The Debtor voluntarily filed for chapter 13 bankruptcy relief and the Debtor is seeking to have the benefit of a bankruptcy discharge but does not want to have the burden of complying with the requirements needed to obtain that discharge. Bankruptcy, although provided for in the Constitution, is a legislatively created benefit, not a right and Congress may alter and withhold that benefit at its discretion. As stated by the KochCourt “Congress is free to limit chapter 7 protection to truly needy debtors” which appears to be one of the driving purposes of BAPCPA. A debtor has no constitutional or “fundamental” right o a discharge in bankruptcy.Therefore, by voluntarily filing a chapter 13, the Court concludes the Debtor is volunteering his SSI in PDI just as other debtors did pre-BAPCPA.
I also noticed the judge used § 707(b)(3) as an argument for A and B (below), but in § 707(b)(2)(A) and (B) it references CMI, which does not include SS, which I think would exclude SS in the argument for totality. Again, this should not be the case because a presumption of abuse is supposedly regarding CMI. Which, again SS is not included in.
"In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter in a case in which the presumption in subparagraph (A)(I) of such paragraph does not arise or is rebutted the court shall consider - (A)whether the debtor filed the petition in bad faith; or (B) the totality of the circumstances... of the debtor’s financial situation demonstrates abuse."
There is also this case:
According to the Eighth Circuit Bankruptcy Appellate Panel, a bankruptcy debtor cannot lose social security benefit payments in a bankruptcy case, even the money is paid as a $17,165 lump sum for past benefits. In re Carpenter, No. 08-6046 (8th Cir. BAP July 13, 2009), held that section 407 of the Social Security Act excludes such payments from the bankruptcy estate. Under the logic of this decision, social security payments of any kind are excluded from the bankruptcy estate in either chapter 7 or chapter 13 cases, and the debtor can keep this money without even needing to claim it as exempt.
The debtor in Carpenter had received $17,165 as a retroactive social security disability benefit. He placed the funds in a segregated bank account and later converted the money into a cashier's check. Several months after receiving the money he filed chapter 7. The bankruptcy court ordered him to turn the social security money over to the trustee, but the appeals court reversed, holding that section 407 specifically overrode any bankruptcy statute suggesting that such funds belonged to the trustee.
Under this decision, it doesn't matter what state the bankruptcy is filed in, because the funds don't have to be claimed as exempt. The fact that the funds are from social security excludes them from the reach of any bankruptcy trustee.It is important to note that section 707(b)(2) of the bankruptcy law (the means test), as well as section 1325(b)(2), exclude social security payments from consideration in a debtors budget in either chapter 7 or chapter 13. This means that social security benefits ought to be excluded from consideration in any consumer bankruptcy case, whether as an asset of the estate, or as income for the chapter 7 means test, or as income for funding a chapter 13 plan. It even should excluded from consideration for section 707(b)(3) motions, where the U.S. Trustee attempts to force debtors to convert to chapter 13, since the money can't be used for creditors anyways under section 1325(b)(2).
In re Carpenter is an important reminder that courts should exclude social security payments from consideration in any consumer bankruptcy case.
I found the case here:
I will be posting any information that I think is helpful as my case progresses
Let's give a big round of applause for congress for once again confusing us!!
Social Security Act : Sec. 207. [42 U.S.C. 407]
(a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.(b) No other provision of law, enacted before, on, or after the date of the enactment of this section[97], may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
(c) Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986[98] by the person entitled to such benefit or such person's representative payee.
If you think about it, it doesn't make sense that the benefits are not subject to execution by creditors, but can be used to help pay back debt in a chapter 13 plan. Therefore, if you look at it in respect to that, they really are being used in execution for a creditor. hmmm....
Form B22A (means-test) line 10 "Do not include any benefits received under the Social Security Act"
USC title 11 chap1 § 101 (10A)(B)
10A) The term "current monthly income"--
(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor's spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on--
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and
(B) includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor's spouse), on a regular basis for the household expenses of the debtor or the debtor's dependents (and in a joint case the debtor's spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism (as defined in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status as victims of such terrorism.
And...
USC title 11 Chap 13 § 1325 (b)(2)
the term “disposable income” means current monthly income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable nonbankruptcy law to the extent reasonably necessary to be expended for such child)
One of the arguments that I found was stating that CMI is used to determine the payback in a 13, but SS is excluded from CMI according to:
§ 707(b)(2)(A) and (B)
(iv) The presumption of abuse may only be rebutted if the additional expenses or adjustments to income referred to in clause (i) cause the product of the debtor's current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be less than the lesser of--
Doesn't this show that by stating that the presumption of abuse can only be rebutted if the CMI is too high? It looks to me that the CMI as explained in both USC title 11 Chap 13 § 1325 (b)(2) and USC title 11 chap1 § 101 (10A)(B) does NOT include disability. Which would mean that they could not use the presumption of abuse to push us into a 13.
Also, I found this memo (based on a Utah case, where I am) which could be an argument against our case, but there are a few things that actually might help us:
I noted the following that may or may not help:
The trustee orginally objected because although the debtor did not include SSI as income, but he used it as an expense.
(I wonder if we added it in and then exempted it out, if that would help) Also, I think the judge was more critical because in the case, it is clear that they were amending things to "hide" the SS.
Page 3:
The Debtor also argues that previous decisions which included SSI as part
of § 1325(b)(2) “disposable income” did so based on the voluntary filing of a chapter 13;
**You can argue that it is always voluntarily because you make the choice to convert to a 13, rather than dismiss a 7 - BUT, you can also argue that there was no other option but to file a 13 (see the 8th circuit case)**
Page 6:
There is no dispute that SSI is statutorily excluded from both the calculation of CMI
under § 101(10A) and the calculation of DI under § 1325(b)(2) as both calculations are
determined by using Form 22C. However, the Tenth Circuit Court of Appeals (“Tenth Circuit”) in In re Lanning7determined that CMI and DI calculations are different than the calculation of
PDI found in § 1325(b)(1)(B)8
Page 9:
In Re Koch - The Court concluded that the exempt income should also be included in the substantial abuse determination because “Congress is free to limit chapter 7
protection to truly needy debtors who cannot fund a chapter 13 plan with exempt and non-exempt income.”26
(sites ID at 1290) How can this be used to supercede any of the existing statutes, especially the Social Security act? Also, what is the definition of non-exempt in this? Couldn't that be interpreted as too broad? I would think that they would have needed to include SS in this statement by name because they would have to "supercede" the SS act in order to make this statement true. Aren't there several types of "exempt" income, that don't have the protection of the SS act?
Page 10:
There are some post-BAPCPA cases which have taken the view that SSI should be excluded from PDI based on the definition of DI from § 101(10A).31
See In re Wilson, 397 B.R. 299, 319 (Bankr. M.D.N.C. 2008) (social security income of
the Debtor’s non-filing spouse will not be included in the determination of the Debtor’s income for purposes of Section 1325(b)(1)(B)). In re Upton, 363 B.R. 528, 535 (Bankr. S.D.Ohio 2007)(consideration of benefits received under the Social Security Act is inappropriate for determining projected disposable income). In re Ward, 357 B.R. 741, 745 (Bankr. W.D.Mo.2007)(the debtor is correct that her social security income is not required to be included in theanalysis of whether she is contributing all of her projected disposable income to her plan but social security income must be included on Schedule I so parties can consider whether plan is filed in good faith). But see In re Calhoun, 396 B.R. 270, 276 (Bankr. D.S.C. 2008)(in § 707(b)(3) context, it is not proper to report and subtract social security income to shield from creditors because Congress knew how to exclude benefits when writing BAPCPA).
Page 12:
Here, even with the exclusion of SSI on Form 22C, the Debtor is an above median
income debtor as his CMI is above Utah’s median income for a family of two
(we are still below median income with the exclusion)
Page 15:
The Debtor voluntarily filed for chapter 13 bankruptcy relief and the Debtor is seeking to have the benefit of a bankruptcy discharge but does not want to have the burden of complying with the requirements needed to obtain that discharge. Bankruptcy, although provided for in the Constitution, is a legislatively created benefit, not a right and Congress may alter and withhold that benefit at its discretion. As stated by the KochCourt “Congress is free to limit chapter 7 protection to truly needy debtors” which appears to be one of the driving purposes of BAPCPA. A debtor has no constitutional or “fundamental” right o a discharge in bankruptcy.Therefore, by voluntarily filing a chapter 13, the Court concludes the Debtor is volunteering his SSI in PDI just as other debtors did pre-BAPCPA.
I also noticed the judge used § 707(b)(3) as an argument for A and B (below), but in § 707(b)(2)(A) and (B) it references CMI, which does not include SS, which I think would exclude SS in the argument for totality. Again, this should not be the case because a presumption of abuse is supposedly regarding CMI. Which, again SS is not included in.
"In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter in a case in which the presumption in subparagraph (A)(I) of such paragraph does not arise or is rebutted the court shall consider - (A)whether the debtor filed the petition in bad faith; or (B) the totality of the circumstances... of the debtor’s financial situation demonstrates abuse."
There is also this case:
According to the Eighth Circuit Bankruptcy Appellate Panel, a bankruptcy debtor cannot lose social security benefit payments in a bankruptcy case, even the money is paid as a $17,165 lump sum for past benefits. In re Carpenter, No. 08-6046 (8th Cir. BAP July 13, 2009), held that section 407 of the Social Security Act excludes such payments from the bankruptcy estate. Under the logic of this decision, social security payments of any kind are excluded from the bankruptcy estate in either chapter 7 or chapter 13 cases, and the debtor can keep this money without even needing to claim it as exempt.
The debtor in Carpenter had received $17,165 as a retroactive social security disability benefit. He placed the funds in a segregated bank account and later converted the money into a cashier's check. Several months after receiving the money he filed chapter 7. The bankruptcy court ordered him to turn the social security money over to the trustee, but the appeals court reversed, holding that section 407 specifically overrode any bankruptcy statute suggesting that such funds belonged to the trustee.
Under this decision, it doesn't matter what state the bankruptcy is filed in, because the funds don't have to be claimed as exempt. The fact that the funds are from social security excludes them from the reach of any bankruptcy trustee.It is important to note that section 707(b)(2) of the bankruptcy law (the means test), as well as section 1325(b)(2), exclude social security payments from consideration in a debtors budget in either chapter 7 or chapter 13. This means that social security benefits ought to be excluded from consideration in any consumer bankruptcy case, whether as an asset of the estate, or as income for the chapter 7 means test, or as income for funding a chapter 13 plan. It even should excluded from consideration for section 707(b)(3) motions, where the U.S. Trustee attempts to force debtors to convert to chapter 13, since the money can't be used for creditors anyways under section 1325(b)(2).
In re Carpenter is an important reminder that courts should exclude social security payments from consideration in any consumer bankruptcy case.
I found the case here:
I will be posting any information that I think is helpful as my case progresses
Let's give a big round of applause for congress for once again confusing us!!
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