Generally, social security disability is exempt in bankruptcy although you can voluntarily commit it towards your plan payments. If your claim was pending when you filed your case, it should have been disclosed as a potential asset on Schedule B and then exempted on Schedule C. If that has not been done, you should disclose your award to the Chapter 13 trustee and concurrently amend Schedules B and C to report and exempt the claim. Keep in mind that Chapter 13 is voluntary and you can drop out anytime. Therefore, if you disclose your award and the trustee asks for some or all of it, if you choose not to cooperate then you can dismiss your case or possibly convert it to Chapter 7 if you qualify for that type of bankruptcy. But if you amend your schedules, that becomes public information and certain creditors have a right to garnish your benefits, for example student loans and domestic support. If you have debts like that, it is best to get legal advice on how to handle them. If the back pay is not social security, then it is likely to be claimed by the trustee unless you amend your plan to exempt it for some reason. There is some leeway for fluctuations in income in a Chapter 13, however, so for example if it does not increase your annual compensation by more than 10 percent, you might assert that it is not a material difference and the trustee might let you keep it. Nevertheless, full disclosure is required.
Answered on Dec 06th, 2013 at 7:36 AM