Social Security Backpay (and more) and Chapter 7

[thebolt]

Okay...so I have read over the Nolo book on filing Chapter 7 and could not find answers on a couple question that are clear to me. (Maybe I'm not very smart and the answer was staring me in the face ).

1) I am now getting Social Sercurity Disability benefits and understand that is considered exempt in California. BUT...I got my back pay of 6,000 bucks from Social Security. My question is...is that considered exempt under the Social Security exemption? The cash is gone due to me paying back friends and family members that loaned me money while I was disabled (I had a major medical illness with my pancreas that caused me to not be able to work and turned me into a diabetic). My disability benefits alone were not covering my living expenses and then all the doctor visits and co-payments for medical supplies and medications...so my friends and family were loaning me money to do that. When I got my backpay a few months ago I paid them all back. Will this be a problem?

2) I read in the Nolo book that you need your Federal tax returns. It does not say anything about state tax returns. I know this is not smart but I only filed federal taxes for the last 3 years...will this be a problem?

3) The Nolo book was not clear on this one either (or at least I didnt get it). Say I got my credit report and it shows Herbert P. Sears(collection agency) has 10 seperate entries with 10 seperate account numbers. Now 3 of the entries are for 3 seperate hospital visits to Memorial Hospital with each visit having different account numbers. Okay, now 6 of the extries are for Dr. XYZ for 6 different office visits all with the same account numbers. Finally 1 entry is for Physician's Automated Laboratory that has its own account number. Do I list Herbert P. Sears 10 different times? Do I list Herbert P. Sears 3 times? Or do I list them 1 time? Or do I list Memorial Hospital one time with the total amount owed and then list Herbert P. Sears as a "also notify"? Etc....

I guess I am asking how would you list them? I have alot of them like this and some I dont have account numbers for nor do I have addresses for the original creditor...just a name.

Sorry the post is long but I have done alot of reading and still not clear on my questions...thanks alot guys (and ladies)

[tigergem]

Ah... it is my understanding that the social security back pay is only exempt up to the point where it leaves your hands. Since you used it to pay friends and family, I think that could be construed as insider payments. I'm pretty sure the Trustee will ask where it went.

Texas doesn't have personal income tax, so I don't have any experience with the question of state income tax returns in the bankruptcy process and can't comment. If you haven't filed though, I am so surprised Sacramento let you get away with that. They hounded me to file my taxes and register my vehicle for three years after I had left the state! But you'll probably need to file those in order to include any owed taxes in your bankruptcy.

For the collection agency question, you list the original creditor and the collection agency as "also notify". If they have separate account numbers, I would list them separately. At least that is what I did. If they have the same account number but only different dates of service, then lump them together. But that is only for the schedule. On the matrix, each party will only get listed once.

Good luck.

[thebolt]

Thanks for the info tigergem. Yeah, I am a little worried about the back pay from Social Security. I mean yes it is a good lump of money but it was honestly paid back for all the money my friends and family was helping out on when I was in a bad situation. I just dont know what about it...when all else fails I guess just be honest and see what happens. I did not deposit the money in any savings or checking account (don't have either of them) and just cashed the check and started paying the people I see everyday. Where do I put that though? Where at on the forms would I put a lump sum like that? Do you think I should wait to file for a few months so it is a little older than a few months old?

BTW...what happens if you only have a collection agency with no original creditor? Just put the collection agency without an original creditor?

[tigergem]

Well. Payments made to relatives up to 12 months prior to filing are recoverable by the Trustee. I think for non-relatives, the look back period is only ninety (90) days.

When did you receive this payment anyway? Do you even know how much you paid to whom?

I think it just gets prorated into your monthly Social Security Income on Schedule I, on line 11. I used Best Case software to prepare my forms and there is a way to annotate in there what the regular monthly payment is and the lump sum, for clarification purposes. I don't know if the Nolo forms offer you that or not.

Just remember this when you go to file your income taxes: For income tax purposes only, sadly not for bankruptcy purposes, (at least not to my understanding!) it gets prorated as income for the specific months it was intended to reimburse you for. For example if you received $1000 for each of Oct., Nov., Dec., Jan., Feb., March... then only $3000 goes on your previous year income tax return, and the rest on the current year.

If you have a collection agency with no creditor, you can list the collection agency and leave it at that.

[thebolt]

I got the money 2.5 months ago. I do know how much and to whom I repaid back. I kept a log of the money I owed.

[tigergem]

Are you under median with it included in there?

[thebolt]

Are you under median with it included in there?

Yes...even with that money I am way under.

[catleg]

tigergem, I'm curious how you used BestCase. Did you use the demo? I can't imagine a pro se filer paying for a single user license at $900.

[tigergem]

tigergem, I'm curious how you used BestCase. Did you use the demo? I can't imagine a pro se filer paying for a single user license at $900.

hmm. And I can't imagine someone spending $2500 or more to retain an attorney that doesn't fill out the paperwork correctly or have time to return phone calls.