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Social Security Income Can Be Used To Evaluate Debtor's Financial Circumstances

Posted By admin || 6-Jan-2009

Although a debtor filing for bankruptcy will not have his/her social security income included in the means test calculation the bankruptcy court can examine social security income when evaluating the total financial circumstances of the debtor.

When examining the case of a bankruptcy filer receiving social security income, bankruptcy Judge Duncan said "while the totality of all of the debtor's financial circumstances must be examined, the ability to pay a significant dividend to creditors and the failure to do so standing alone can be an abuse of Chapter 7, absent mitigating factors."

The case involved a debtor receiving social security income who had previously paid creditors $2,638 for 22 months through a credit counseling plan, but later stopped the payments and attempted to discharge his debts through Chapter 7 bankruptcy .

The judge deemed that the debtor was attempting to abuse the bankruptcy system because he saw the large payments over the course of nearly two years as proof that the debtor was able to pay a significant amount to creditors over a long period of time.

This is why it is so important to speak with a bankruptcy attorney before going to a credit counseling company. Often debtors engage in debt payment plans that are not to their long-term benefit. A bankruptcy attorney will help you make the right choice.

Categories: Bankruptcy
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