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Social Security in the Bankruptcy Chapter

The chapter of bankruptcy provides an explanation of social security benefits to a debtor. However, one experience a lot of trouble if they have social security benefits prior to filing for bankruptcy. The exemption and protection of social security is dictated by the federal law and the bankruptcy courts. So, you should understand that the trustee has no right deny you the ongoing social security benefits. The law also assures you that you will benefit from the social security even before you file your bankruptcy.

Nevertheless, the trustee might claim that you should not be exempted from any funds if you commingle non-Social Security funds with these benefits. By commingle your Social Security Benefits with other funds, you are likely to lose the entire amount that should be exempted for social security benefit. Each case of social security benefits will depend on the trustee assigned to oversee the matter. It is advised that you don’t deposit money in the same account that you use for your social benefits.
When you separately keep social security benefit from another account, the trustee will be convinced that they are protected. When you deposit other funds to social benefit account, the trustee will conclude that the account is not protected. Bankruptcy exemption such as cash on hand can help you to social funds commingle with other funds. The federal law also protects lump sum payment received from social security prior to filing bankruptcy.

However the same rules applies when it comes to commingling funds. The trustee will conclude that the funds are unprotected if you are lump sum security and social security have been commingled. The likelihood of the trustee to argue that the lump sum is in the bankruptcy estate will be determined by how big the potential payoff is. A trustee trying to prove that commingled funds are unprotected is more likely to gain. You need to ensure that your Social security are separate from the other account in order to be able to show the court that your account are protected.

By being bankrupt, the bankruptcy trustee takes all the creditors property except for some personal items. A debt is what connects the creditor with the trustee. As long as this is accepted by the trustee, payments can be made to the creditor via dividends. A person who is discharged from bankruptcy is free from all debts charged on him. The only exception is when the debt was obtained through fraud. All debts in bankruptcy including social treatment are treated in the same way. When a person with a social security debt person is declared bankrupt, recovery action is ceased. Once a debtor is declared bankrupt, it is not possible to do repayment through deduction from the social payment. Any time a debtor is declared bankrupt, money paid towards him should be returned unless the trusty need to do the repayment.

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