How Are Social Security and Retirement Benefits Affected by Bankruptcy?
Full Question:
Answer:
Exempt property is that property of the debtor that does not become part of the bankruptcy estate. When a debtor files for bankruptcy protection, certain assets of the debtor become part of the bankruptcy estate and are disposed of by the trustee and the proceeds are used to pay off the debtor's unsecured creditors. Property that is retained by the debtor (exempt property) include:
The debtor's right to receive -
a social security benefit, unemployment compensation, or a local public assistance benefit;
a veterans' benefit;
a disability, illness, or unemployment benefit;
alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor,
unless -
such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose;
such payment is on account of age or length of service; and
such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.