Many people who come in for an initial bankruptcy consulation have a pretty basic idea of what bankrupcty is and what they want to do. However, since the bankruptcy laws changed in 2005 (BACPA) the question doesn't necessarily boil down to what you want to do but whether you can do what you want to do.
Now, the ability to file a Chapter 7 bankruptcy or "fresh start bankruptcy" is not always a choice but is determined by your income. The begin with we take a look at your last six months of income, we total that number and divide by six to get your average monthly income. We then take that number and multiply by 12 to get your annual income. If this annual income is below the median income (based on your family size) in your state you can then choose to file a Chapter 7, if it is not, you may be forced into filing a Chapter 13 bankruptcy.
Having an income above median income means we have to take a more in depth look into your calculated income and expenses through what is called the "means test". This test allows you to include some expenses and not others, as well as include some income sources and not others.
A source of income that is not used in calculating income for the means test purpose are social security benefits. So having social security income will not in and of itself pushing you over median income into Chapter 13 territory. However, the story doesn't stop there. Just because your income isn't above median we still must look at your monthly take home pay and compare that your monthly expenses. If there is too much money left over each month then you still may be forced into Chapter 13 even though you "passed" the means test.
So long story short, receiving social security benefits may or may not affect your bankruptcy options. Understanding all the nuances of bankruptcy can be a difficult task, this is why you really should considering using an experienced bankruptcy lawyerexperienced bankruptcy lawyer if you are considering filing. The consultation is always free.
