If I file for bankruptcy is my Social Security income exempt?

For the most part, your social security money is protected when you file for Chapter 7 bankruptcy. But not if you've mixed the money with other funds. Read on to learn more.

What Is Exempt Property?

When you file for Chapter 7 bankruptcy, the bankruptcy trustee can take your property and sell it to repay your creditors. However, the trustee cannot take anything that is "exempt" by law. Federal bankruptcy law and states have set forth lists of property that are exempt up to a certain amount. To learn more about exemptions and the role they play in Chapter 7 bankruptcy, see our Bankruptcy Exemptions area.

Social Security Funds in Chapter 7 Bankruptcy

So what happens to your social security money when you file for Chapter 7 bankruptcy?

If you file for Chapter 7 bankruptcy, your ongoing social security payments are exempt, which means you keep them.

Social security payments you received before you file for bankruptcy are also exempt, with one important exception. If you comingled (mixed) the social security money with other money, you may lose the exemption.

To learn how to protect already-received social security funds see Is Social Security Safe During Bankruptcy?