If you rely on Supplemental Security Income (SSI) benefits to pay for your housing, food, medical care, and other basic needs, the idea of it being taken away can be quite frightening. This is why you may be hesitant to declare bankruptcy, even though your creditors may already be after you, and your financial status is alarming. Well, you should know that the New Jersey bankruptcy court will classify your assets as either exempt or non-exempt. With that being said, please follow along to find out whether your SSI benefits will be exempt from your consumer bankruptcy case and how a proficient New Jersey SSDI benefits lawyer at The Law Offices of Sheryl Gandel Mazur can advise on whether this is the best financial move for you to take.
Are my SSI benefits generally exempt from my consumer bankruptcy case?
First of all, if you possess what is categorized as an exempt asset, your appointed bankruptcy trustee may be hindered from seizing it, liquidating it, and using its funds to repay your outstanding creditors. The United States Bankruptcy Code observes exempt assets because it holds that debtors should not have to sacrifice basic and essential living needs when filing for bankruptcy. And so, common examples of exempt assets include personal items, retirement accounts, and, namely, public benefits and income sources like your SSI benefits.
At the end of the day, SSI is a needs-based federal benefits program intended to provide eligible individuals with basic support. Under normal circumstances, federal law protects these benefits from being assigned, garnished, or levied by creditors. Therefore, the New Jersey bankruptcy court may uphold the same standards. Given that you may receive the same protection, though, we must recommend that you do not go through with the bankruptcy process unless you deem it absolutely necessary for your current financial state.
What are additional measures I can take to protect my SSI benefits during my bankruptcy process?
Of note, even if you pursue a Chapter 13 bankruptcy case that involves a repayment plan, you may rest easier knowing that your SSI benefits may not be considered a countable income to contribute towards these monthly payments. However, to better ensure this protection, it is in your best interest to deposit these benefits checks into a separate bank account. This is because if you mix it with large balances of your wages, gifts, and other deposits, your trustee may challenge whether all these funds should remain protected.
Similarly, even though your SSI benefits are generally protected from creditors, they may still exercise a legal authority to freeze your bank accounts temporarily until the exempt status is confirmed. This means that you may get blocked from accessing your SSI benefits, which you may heavily rely on. To prevent any further delays on this freeze, you should have clear deposit descriptions and consistent accounting to help prove and confirm the source of these funds.
To conclude, please prioritize scheduling an initial consultation with a talented New Jersey SSDI benefits lawyer from The Law Offices of Sheryl Gandel Mazur. We would be honored to represent you in your legal case.
