It is not uncommon that individuals receive benefits from the government. Whether you are receiving social security retirement, social security disability, food stamps, housing or utility vouchers, you may wonder how bankruptcy will affect you. You can rest at ease knowing that your benefits will not be affected by you filing bankruptcy. In most cases, they are off-limits.
The reality of most people who receive benefits is that what you receive does not change your financial situation much. You still accrue credit card debt and medical debt. You still have difficulty paying your credit card bills and medical bills. You may use your business or get a personal loan to help you get by. Between the bills you have to pay and the cost of owning a car, there is usually very little left for housing, food, and utilities. If you are facing a repossession, foreclosure, or having problems with a mortgage modification, a bankruptcy can help you with that while also protecting your benefits.
However, whether you file a Chapter 7, Chapter 13, or Chapter 11 bankruptcy case, you will still need to list that you are receiving benefits. Not listing your benefits or the benefit income could be considered perjury or fraud in your bankruptcy case. Here is how to make sure you properly document your bankruptcy paperwork.
Social Security/Disability – If you receive Social Security and/or Disability, it is important to list those amounts in order to keep them off limits from your creditors. This can include any amount received under the Social Security Act, including Retirement, Disability, or Supplemental Security Income. In most instances, social security benefits and/or disability benefits do not affect your bankruptcy.
The time that your social security and/or disability may affect your bankruptcy are when you receive a lump sum payment of benefits for past due amounts or amounts that were disputed. This is because the Bankruptcy Court will see a large surplus of monies received and then the Bankruptcy Court will have to determine how much of those funds are necessary for your support versus what amount, if any, should go to the creditors.
There are 2 places you need to list/address your regular monthly benefits. You should list the amounts you receive as income on your Schedule I of your bankruptcy documents. You should list your annual income from these benefits on your Statement of Financial Affairs as annual income from another source other than income. These amounts are exempt from the calculation of your current monthly income when determining your income to see if you are under the income guideline to file a Chapter 7 bankruptcy. Any amounts received under the Social Security Act are exempt from the Statement of Current Monthly Income.
Food Assistance – If you receive any type of food assistance, such as food stamps, Electronic Benefit Transfer (EBT benefits), Supplemental Nutrition Assistance Program (SNAP benefits), whatever you call them, they should not affect your bankruptcy. The main reason is that most individuals or families that receive these amounts end up spending the monies they receive each month. This means that if you receive a benefit of $222.00 per month, you often spend that amount (or more) in food expenses each month.
There are 3 places you need to list/address your regular monthly food assistance amount. You should list the amounts you receive as income on your Schedule I of your bankruptcy documents. You should also list the total monthly amount you spend on food on your Schedule J. When calculating the amount spent on food on your Schedule J, make sure to include all amounts spent on groceries, take out, eating out at restaurants, and all the food you purchase using your benefits. This means that if you receive $474.00 in food assistance, you should list that as additional income on your Schedule I. Second, your Schedule J expense for food should be at least the $474.00 food assistance amount that you spend on food each month. Third, you should list your annual income from the food assistance on your Statement of Financial Affairs as annual income from another source other than income.
Housing Assistance – Housing benefits have many different names. Some people call them Section 8 or housing vouchers. These benefits provide rental assistance to families, the elderly, and persons with special needs based on their income. Housing benefits are sometimes more formally called the Housing Choice Voucher Program (also known as “HCV”). There are also housing benefits known as Project-Based Voucher Program which is tied to the actual unit you live in, and these benefits are not transferable.
The places you need to list/address your regular monthly housing amount depend on whether you receive the benefit and pay a total amount to the landlord or not. If you receive the monies yourself and then pay your landlord, you should list the benefits you receive as income on your Schedule I of your bankruptcy documents. You should list the total monthly amount you pay for housing, including the housing amount on your Schedule J. If you are directly receiving the benefits, you should list your annual income from housing assistance on your Statement of Financial Affairs as annual income from another source other than income.
Otherwise, if you only pay your portion of the rent and the landlord receives the housing assistance from an entity, such as a housing authority or the government, you do not need to list your housing benefit as income. On your Schedule J, just list your portion of the rent as your expense.
Utility Benefits – Utility benefits most commonly help individuals and families with the cost of heat and air conditioning costs and paying bills. In Florida, the program is known as Florida’s Low-Income Home Energy Assistance Program (LIHEAP). If you receive other benefits, such as food assistance, you may qualify for utility assistance also. The Florida Department of Economic Opportunity has the Weatherization Assistance Program which assists with weatherization and energy-related home repairs by helping improve energy efficiency.
Meeting with an experienced bankruptcy attorney can ease your fears and ensure your bankruptcy filing properly lists your benefits and protects them from creditors. There is no substitution for the advice an experienced bankruptcy attorney can provide. You may find a great value in the fees you pay for an attorney to handle your paperwork correctly and counsel you about your bankruptcy. Contact Feher Law to set up your free bankruptcy consultation through our website, https://feherlaw.com/contact-feher-law-st-petersburg-florida, at 727-359-0367, or via email at Kfeher@FeherLaw.com.