Social Security

Options with Social Security Disability and Credit Card Debt

When the financial storm clouds over your budget and overall credit history, it is easy to assume there is no way out and that you are forever trapped within this situation. That is especially the case when you benefit from Social Security disability and credit card debt is knocking at your door consistently.

What to Know About Social Security Disability and Credit Card Debt

If this is the case, what exactly are your options? Is there a way to navigate your way out of this financial pit? What about your Social Security disability benefits? Is that the first income stream that will be attacked if your credit card debt continues to get out of hand?

The overview below will help you to answer these questions and much more.

Disability Benefits Are Not Included with Ordinary Income

One of the primary principles that you should remember is that your disability benefits are essentially protected in a world that is separated from the world of your ordinary income when it comes to debt collection. Multiple reports have confirmed that Social Security Insurance (SSI) disability payments as well as Social Security disability insurance (SSDI) in general are protected and kept away from creditors.

However, you should keep in mind that your SSDI can still be removed to pay for specific types of debts. To identify which types of debt will are included, it is highly recommended for you to consult with an expert attorney that specializes in consumer debt management options and settlement opportunities.

You May Qualify for Debt Forgiveness

Would you not enjoy having your debts forgiven and wiped away from the slate of your credit history? Of course! Fortunately, there are specific types of debt that can receive this type of financial forgiveness if you have become disabled. As is the case with most forms of financial protection and assistance, there are certain circumstances that must apply and requirements that must be met to qualify.

Therefore, it is imperative for you to consult with a professional attorney who focuses on these types of options and has helped a vast number of other clients in the past who experienced similar issues. Even if you have decided to take the route of filing for bankruptcy, you may also find that your Social Security disability benefits are protected in those cases as well.


Bankruptcy Protection for Your Disability Benefits

As you review the list of the assets that you may have to give up after filing bankruptcy, you might be concerned about the long-term income stream of Social Security disability benefits. Fortunately, you can remove this from your list of concerns. As referenced above, your Social Security disability income is protected. Even when you have the Social Security disability and credit card debt overwhelming you from the other end of the spectrum, it is still protected. How so?

Federal and State laws are responsible for keeping these benefits safe and essentially untouchable by your bankruptcy filing. If you are filing for Chapter 7, the Federal and State exemption laws will come in handy to ensure that your disability benefits remain untouched, so that you can continue to enjoy this income stream year after year as you repair the rest of your credit from the massive blow issued by the bankruptcy discharge.

Many consumers do not realize that federal law provides qualified consumers with exemptions from disability benefits that are provided by the Social Security Act. However, that is not where the protection stops. Exemption laws enforced by the State allow consumers to enjoy additional protection. There are even certain jurisdictions that will typically remove the Social Security disability benefits from the bankruptcy conversation all together. In those cases, the filer would not even need to factor in their disability benefits into the paperwork needed to file for Chapter 7 or Chapter 13.

It is imperative to take note that this is not an automatic process, though, in most cases. Therefore, it is even more imperative to consult with a professional attorney who specializes in bankruptcies and knows exactly how to navigate their way through the turbulent terrain of exemption laws in your jurisdiction. As you complete the bankruptcy paperwork, your attorney will work with you directly to help you list all applicable benefits and classify them as property. The important step is that they will also make sure that they notate the necessary exemption laws available to protect your benefits and hopefully remove them from the equation.

Does the Same Factor Apply to Student Loans?

When analyzing your Social Security disability and credit card debt, you may also focus on how your student loans will factor into the equation. For instance, would you still be required to pay your student loans off if you are suffering from a long-term disability?

In most cases, federal student loans can be discharged based on your disability. If you are not going to be able to return to work for a minimum of five years due to your disability, then there is a federal student loan arrangement in place that is known as the “total and permanent disability” discharge (also referred to as a TPD discharge). TPD discharges can be used for a variety of student loans from the Federal government and agencies including the Perkins Loans, Federal Family Education Loan (FFEL) and the Federal Direct Loan program. Veterans who currently have 100% disabilities that are connected to their past service in the armed forces can also qualify for TPD discharges.

The Bottom Line: Call an Attorney

Once again, it is important to not just assume that you qualify for the various options outlined above. You should still pay close attention to what an expert attorney tells you to do and trust in his or her expertise to guide you along the way. When you are receiving Social Security disability and credit card debt seems to overwhelm your household budget month after month, it is vital to remember that you do have options. Whether you can manage your own debt or not, it is still highly recommended to seek the guidance and advice of a licensed attorney with a successful track record in helping other clients with similar circumstances in the past.

Published by
Chad Van Horn

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