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This is a simple question to pose, but the answer is a bit more complicated to give.  Part of the complication lies in the fact that in bankruptcy social security has two identities:  it is income, and it is an asset.  The rest of the complication arises because there is more than one chapter of the Bankruptcy Code under which individuals and married couples file.

I.          Social Security Income As An Asset

In any personal bankruptcy, one of the reporting requirements is found in 11 U.S.C. § 521(a)(1)(B)(i):  “The debtor shall—file—  . . . a schedule of assets . . .”  Social security payments are an asset, and become part of the bankruptcy estate that is created when the debtor files for bankruptcy protection.  (See 11 U.S.C. § 541(a)).
Continue Reading What Happens To Social Security In Bankruptcy?

A fellow bankruptcy attorney recently asked me this question based on his reading of 11 U.S.C. § 523(a)(7), which provides (with emphasis added):

A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt— . . . to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss . . .

Since the obligation to repay a social security overpayment is a debt to a governmental unit, but could be characterized as “compensation for actual pecuniary loss,” the questioner wanted to know if it could be discharged in bankruptcy.
Continue Reading Can A Social Security Overpayment Be Discharged In Bankruptcy?