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Chapter 13 Debtors May Keep Social Security Income

Consumer Bankruptcy News in its November 2012 edition reports that Chapter 13 debtors may keep their social security income. The Bankruptcy Code says Social Security income is not included in a debtor’s “disposable income.” The 10th Circuit Court of Appeals ruled in Anderson, Trustee, v. Cranmer (In re Cramner), that neither recent Supreme Court decisions or the Bankruptcy Code require that Social Security income be committed to Chapter 13 plan payments.


In In re Cranmer, the Chapter 13 trustee asserted that the debtor would receive more than $87,000.00 in Social Security income over the life of his plan and objected to the debtor’s plan on that basis. The 10th Circuit rejected the trustee’s argument stating that Bankruptcy Code Section 105(10A)(B)’s definition of “Current Monthly Income” specifically excludes benefits received under the Social Security Act. Therefore, Social Security income is not included when calculating disposable income.

The 10th Circuit found additional support for its conclusion in the Social Security Act, which shields payments made pursuant to the Act from “execution, levy, attachment, garnishment, or other legal process,” or from “the operation of any bankruptcy or insolvency law”.