May creditors go after your Social Security Income?

By Atty. Crispin Caday Lozano


            If you file for Chapter 7 bankruptcy, your ongoing social security income are exempt, which means you keep them.  Social security payments you received before you file for bankruptcy are also exempt, with one important exception. If you comingled (mixed) the social security money with other money, you may lose the exemption.

Income from the Social Security is protected and is not included in the Means Test calculation to   qualify for bankruptcy.  The Ninth Circuit  held that “Congress’s adoption of the BAPCPA forecloses a court’s consideration of a debtor’s Social Security income or a debtor’s payments to secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a).” Drummond v. Welsh (In re Welsh), No. 12-60009 (9th Cir. March 25, 2013).  Thus, the court in Suttice was “persuaded that Congress intended social security benefits to be protected from inclusion in a § 707(b)(3)(B) analysis, based upon § 407(a) of the Social Security Act and as shown by the Debtors’ social security income being definitively excluded from the means test of § 707(b)(2).” Therefore, while the means test was not found to have supplanted the totality of circumstance test, social security income could not be considered under the analysis.

Question:       How much property can I keep if I file bankruptcy?

Answer:          Most personal properties are exempt from being taken by the creditors if you file   bankruptcy.  This includes retirement accounts and social security income.

If you are filing Chapter 13 bankruptcy, you keep everything because you are repaying your debts. This includes your house and vehicle if you can keep up with the payments.  In a Chapter 7 bankruptcy, most of your assets may be protected through the California bankruptcy exemptions.

Question:       What would happen to my personal property during bankruptcy process?

Answer:          Most personal property such as cash, bank accounts, furniture, clothes, and retirement plans can be protected by exemptions allowed by each state. Most people that file bankruptcy are allowed to keep most, if not all, of their personal property.

Question:       What would happen to my retirement account if I file bankruptcy?

Answer:  Most legitimate retirement accounts are protected from your creditors. Usually, the retirement account must be an IRA or an ERISA qualified retirement plan.

Question:        What if I have a property that is above the State exemptions?

Answer:          If you have non-exempt property and you don’t want to lose it, you may have to give to the Trustee the cash value of that property in a Chapter 7 case.  If you file Chapter 13 you can keep it as long as you will pay the creditors the proposed monthly payment that is confirmed by the court.

Question:       How could I determine which exemptions apply to protect my assets?

Answer:          To determine which exemptions apply to your property it is best to consult a bankruptcy attorney because there are legal complications involved.

Question:       What are exempt and non-exempt properties?

Answer:          Exempt property is property that someone can keep if he filed for bankruptcy. Non-exempt property is what can be seized and sold by creditors or the bankruptcy trustee to pay debts that are owed by the person filing bankruptcy.

Question:       Can I give up or surrender my house and car in bankruptcy if I don’t want to keep it?

Answer:          You can surrender your house and car in either a Chapter 7 bankruptcy or Chapter 13 bankruptcy if you can no longer afford to make payments.  If you are in a Chapter 13 bankruptcy, surrendering your house and car will not automatically lower your Chapter 13 bankruptcy payments. You should contact your attorney to discuss what options are available to you.

Note: This is not a legal advice and you need to speak to an attorney about your personal circumstances.

Bankruptcy Basics


  • Bankruptcy will actually improve your credit within one year because your unsecured debts are discharged. Although the bankruptcy will be in your records for 10 years, not filing bankruptcy will make your credit even worse until most of your debts are paid in full.
  • If you are being sued by your creditors, most money judgment can be eliminated in bankruptcy.
  • Collection actions continue and you can be sued if you are in debt settlement.
  • Chapter 7 will eliminate all unsecured debts. If you are near retirement age, you must eliminate most of your debts.
  • Bankruptcy will stop foreclosure actions. If your trustee sale date is 10 days before, you can still file for bankruptcy.
  • If your salary is being garnished, you have a court case about debts or you are being harassed by creditors, bankruptcy can stop garnishment, court cases, harassing creditors and eliminate the debt.
  • Bankruptcy is cheaper, faster and safer than debt settlement which has no guaranteed success.
  • Preserve your health, eliminate stress and live a happy life by eliminating your debts which is the root of all problems.


Crispin Caday Lozano is an active member of the State Bar of California since 1999.   You can contact him at 1-877-456-9266. Email questions to  Visit our website at

Toll Free 1-877-4LOZANO for free consultation or Schedule an Appointment