Livonia, MI asked in Bankruptcy for Michigan

Q: SSDI is not considered in the Ch 7 means test, but counts as a resource to pay creditors in the budget section, right?

If that's true, in reality it is counted as income that can pay creditors, which can exclude us from Ch 7 if the SSDI is too high. If that's incorrect or only partly true, can you please explain how SSDI is handled? Many thanks.

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2 Lawyer Answers
Trent Harris
Trent Harris
Answered
  • Bankruptcy Lawyer
  • Jackson, MI
  • Licensed in Michigan

A: Social security benefits are not counted against the debtor as income on the Chapter 7 means test. The question for the governmental benefits line item on Form 122 expressly says not to include social security.

On the other hand, if you are asking about Schedule I (the monthly budget done in conjunction with Schedule J), social security should be listed as income, because it is a source of support for the household. This has no bearing on the means test - that is a separate calculation. Note, however, that if your Net Monthly Income on schedule J is too high, that may raise the presumption of abuse because it might show you have a current ability to repay your creditors.

For further information, you should contact a bankruptcy attorney in your area for a consult.

Timothy Denison agrees with this answer

1 user found this answer helpful

Justin M. Gillman
Justin M. Gillman
PREMIUM
Answered
  • Bankruptcy Lawyer
  • Edison, NJ

A: Yes, SSDI is not "income" for the purposes of the Chapter 7 means test. As for "Schedule I Income", we always list the social security income but note that pursuant to applicable federal law, social security income is exempt from attachment/payment to creditors pursuant to 42 U.S.C. § 407. The issue of the disparity of treatment of social security income for the means test v. Schedule I is one that is discussed in a lot of bankruptcy cases around the country. As the status and treatment is subject to rulings in your local district, you should consult an experienced bankruptcy attorney on how it will impact any case.

Timothy Denison agrees with this answer

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