QUESTION
Will creditors take the money from social security for the second mortgage?
Asked on Feb 28th, 2012 on Bankruptcy - Washington
More details to this question:
I was approved for social security because of several medical disabilities. We are also about to declare bankruptcy because of the financial strain my illness has put on us and with the loss of my job. We have a mortgage through one company and a second mortgage through a bank that we also previously did our banking with. We no longer use the bank for personal banking (don't really have any money) but never officially closed out all of our accounts. I just found out about my ss approval and was relieved to find out that I would also be receiving one lump sum for back social security benefits. However, I just found out it was directly sent from social security to our previous bank/2nd mortgage company. My question is can they take that deposit from social security (It's several months worth of benefits) or will they have to return in to social security. I wasn't sure if they could take it since we haven't been able to pay our second mortgage. I'm panicked we really need that money to survive and have been waiting so long. Thanks for any available help.
6 ANSWERS
Personal Injury Attorney serving Homestead, FL
at
Abramson & Magidson, P.A.
Update Your Profile
Social security is generally exempt. You probably had the monthly check sent automatically to the bank. You must explain to social security and the bank the circumstances and point out the transfer/ automatic deposit on your bank statements. Sit down with the officer at the bank and he should be able to assure you the social security deposits will not be taken by the bank.
Answered on Mar 19th, 2017 at 5:52 AM
Business Bankruptcy Attorney serving Raleigh, NC
at
J.M. Cook, P.A.
Update Your Profile
It all depends if the bank has setoff rights under its loan documents. If you close the account before the check arrives, they should send it back to social security and you could get it re-issued to a new bank.
Answered on Mar 02nd, 2012 at 7:31 PM
Bankruptcy Attorney serving Livonia, MI
at
Charles J. Schneider, P.C.
Update Your Profile
Generally your social security is exempt from garnishment but you may have to go to court to assert the right.
Answered on Mar 02nd, 2012 at 2:07 PM
Try to withdraw all the funds from the bank the second it is received and put it into some other bank or credit that you do not owe any money or have no other financial dealings with. Banks often will try to do a Uniform Commercial Code "setoff" which is to take any money in their deposit accounts and transfer it over to any overdue outstanding debt accounts there. You may also have a problem if you wait to file the Chapter 7 until after the Social Security lump sum is actually received. It is always better to file the Chapter 7 before any lump sum is received as 11 U.S.C. 522(d)(10)(A) exempts "The debtor's right to receive a social security benefit." Some bankruptcy judges have held that once you have actually gotten the lump sum check, it is no longer a "right to receive" since you already received it. Then you are limited to the cash wildcard exemptions under 11 U.S.C. 522(d)(5), which is far less than the unlimited amount under 522(d)(10)(A).
Answered on Mar 01st, 2012 at 7:54 PM
Bankruptcy Attorney serving Hampton, VA
at
Haven Law Group, P.C.
Update Your Profile
You would be well advised to take the money out of that bank and place it in another bank not related to the mortgage.
Answered on Mar 01st, 2012 at 1:49 PM
Bankruptcy Attorney serving Seattle, WA
at
Symmes Law Group, PLLC
Update Your Profile
No, creditors can't touch social security income.
Answered on Mar 01st, 2012 at 12:35 PM