Debt can make any person feel stressed out. However, if you are retired, you may be worried even more than a person who is still earning an income. Oftentimes, retirees who are weighed down by debt, fail to take action because they are afraid of losing their social security benefits. The problem is that inaction may not be the retiree’s best option.  If you are facing a similar set of circumstances, it is critical to speak with an experienced debt-relief attorney who can answer your questions and advise you as to your legal options. The following are some of the most frequently asked questions Kansas City area retirees have about debt and their social security benefits:

Are my social security benefits safe from debt collectors?

The answer to this question is, it depends. If the debt collector is a private debt collector, like for a credit card company, your social security benefits are most likely safe. This is because the Social Security Act prohibits private debt collectors from garnishing benefits. However, in rare cases a retiree may have to prove that the amounts in his or her checking account are indeed social security benefits. This most often occurs in cases where the retiree receives paper checks rather than electronic transfer of benefit funds.

But just because these benefits are “safe” from debt collectors, do not expect the phone calls and letters to stop. Debt collectors can still try to collect and even obtain a judgment against a retiree. It simply means that the collector cannot use social security benefits to satisfy the judgment.

However, if the debt collector is the U.S. government, then a retiree’s social security benefits may be at risk. Social security benefits can be garnished to pack federal student loans and mortgages, state ordered child support and alimony and income taxes.

Can I keep my social security benefits if I file for a Chapter 13 bankruptcy?

The answer to this question depends on which state the person filing for bankruptcy (i.e. the debtor) lives. In a Chapter 13 bankruptcy, the debtor proposes a plan in which he or she pays all of his or her disposable income to his or her creditors over a period of time. In some states, the debtor must include his or her social security benefits as part of his or her disposable income. Alabama, Illinois and Wisconsin are just a few of the states where a debtor must include his or her benefits in his or her Chapter 13 plan. Fortunately, debtors in Kansas and Missouri do not have to include this income as part of their disposable income. That is because these states along with other states in the Fourth, Fifth, Sixth, Eighth and Tenth Circuits have decided that social benefits are not to be considered.

Can I keep my social security benefits if I file for a Chapter 7 bankruptcy?

Yes. Social security benefits are considered to “exempt” property under the U.S. Bankruptcy Code. So this means that no matter in which state you reside, your benefits are protected. The only issue may be is if there is an issue as to whether the funds are indeed social security benefits, or from some other non-exempt source.

If you have been avoiding filing for bankruptcy for fear of losing your social security benefits, you owe it to yourself to speak with an experienced Kansas City Bankruptcy and Debt-Relief Attorney. For more than two decades Kansas City Bankruptcy Attorney Douglas Breyfogle has provided clients with debt relief solutions. To schedule a free and completely confidential consultation, contact our office today at (913) 742-8700. Attorney Douglas Breyfogle will thoroughly review your financial situation and evaluate your options to reduce or eliminate your debt. Remember, you do not have to tackle your financial problems alone.