Social Security Benefits Are Not Disposable Income

All,

If you are afraid of getting your social security benefits garnished, there is some news coming out of Fifth and Tenth Circuit Court of Appeals that will interest you.

First of all the Fifth Circuit Court of Appeals is the federal court with appellate jurisdiction over the district courts in the following Southern districts:

• Eastern District of Louisiana
• Middle District of Louisiana
• Western District of Louisiana
• Northern District of Mississippi
• Southern District of Mississippi
• Eastern District of Texas
• Northern District of Texas
• Southern District of Texas
• Western District of Texas

Second of all, the Tenth Circuit Court of Appeals is the federal court with appellate jurisdiction over the district courts in the following districts:

• District of Colorado
• District of Kansas
• District of New Mexico
• Eastern District of Oklahoma
• Northern District of Oklahoma
• Western District of Oklahoma
• District of Utah
• District of Wyoming

These ruling will be powerful if you are residing in one of the covered jurisdictions. Still great case law anywhere in the US.

Social Security benefits are not disposable income that must be disclosed in a Chapter 13 petition, according to a Fifth Circuit Court of Appeals decision.

The definition of “projected disposable income” is not defined in 11 U.S.C. § 1325(b)(1), it involves the term “disposable income,” which is defined and which expressly excludes Supplemental Security Income. The Fifth Circuit recently ruled:

The term “disposable income” means current monthly income received by the debtor … less amounts reasonably necessary for certain enumerated expenses. “Current monthly income,” in turn, is elsewhere defined as the average of “all sources” of the debtor’s monthly income during the previous six-month period. Importantly, the statutory definition of “current monthly income” explicitly “excludes benefits received under the Social Security Act.”

Because including Supplemental Security Income in projected disposable income would violate both the Bankruptcy Code and the Social Security Act, the Fifth Circuit held that Social Security benefits are not included in a debtor’s projected disposable income.

The appellate courts have been resistant to trustees’ demands for petitioners to disclose Social Security benefits as disposable income. Last week, the Tenth Circuit Court of Appeals also ruled that Supplemental Security Income is not disposable income.

More courts will likely follow the lead of the Fifth and Tenth Court of Appeals.

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