How social security is treated in a Chapter 7 Bankruptcy in New York
Alas, the question which is asked by New York City bankruptcy clients in my office is the following: “Ok, so let’s say I have some social security money in my bank account, and that brings that amount above $4,000…wonot the mean Bankruptcy trustee take all my money away.” First…the trustee is not mean (usually) and even if he/she is mean don’t tell them that. Second, you can find some solace in the fact that the trustee WILL NOT go after that bank account…up to $2500, so long as your social security payments are deposited into that account. For once the government actually does something that’s helpful to the average person. Again, this money is exempt regardless of whether the funds have been co-mingled. In other words, if your social security check AND your bi-weekly wages are deposited into the same account, the money is still safe. Again, let’s not go overboard. This isn’t mean to suggest that if your social security check is deposited into an account with $19,000 in it that you’re scott free. You’re not. Per the Federal exemptions, if you have more than $11,000 in your bank accounts (and you’re not trying to use exemptions to protect a home), there’s a good chance that the NYC Chapter 7 trustee could make a play for the money in your account that’s above the amount you’re allowed to exempt. Nevertheless, most people do not run into this scenario. Talk to us to learn more.
Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester. Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area. He is a proud member of the National Association of Consumer Advocates.