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acemagoo61

Junior Member
What is the name of your state? New Hampshire

The following is some information I got on SSDI lump sum and bankruptcy as well as some concerns I have to make sure I have proper representation. I am asking for lawyers who have ever delt with this situation to respond with the proper way of handeling a case like this. I am still going to hire a lawyer, I just need to know how I can tell that I have one that will represent me correctly so that I do not have to worry about a legal snafu.

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Responce from original post:

I know exactly what you're going through and hope I can give you some information to make you feel a little better. I sent an online question to SSA asking about my SSDI being "exempt" from bankruptcy (should I be approved) and they sent me back a memo referring to Section 207(a) of the Social Security Act, 42 U.S.C. 407(a). (If you put that..Section...all of it...in your search engine you should be able to pull it up and read about it). It basically states that any future payments of SSDI and "NONE OF THE MONEYS PAID OR PAYABLE"...shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law."
Check out this website to find some references about the law:
http://policy.ssa.gov/poms.nsf/lnx/0202410001

Be sure you also read GN 02410.005 Bankruptcy Court Orders. There should be a link to it in the above address under Section D. Procedure.

I have found several court cases where the court has stated that SSDI benefits were exempt BEFORE filing bankruptcy and my trustee is admitting he can't have any payments I receive AFTER filing bankruptcy, so what's left???

Also, check out this Supreme Court case if you can find it: Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S. Ct. 590 (1973). The state of New Jersey wanted reimbursed for state aid they gave to somebody named Wilkes and the US Supreme Court said "On its face value, the SS Act in 407 bars the State of New Jersey from reaching the federal disability payments paid to Wilkes. the language is all inclusive: "None of the moneys paid or payable...under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process..." THE MONEYS PAID AS RETROACTIVE BENEFITS WERE "MONEY'S PAID...UNDER THIS SUBCHAPTER," and the suit brought was an attempt to subject the money to "levy, attachment....or other legal process." The Supreme Court said New Jersey could NOT have the money back.

So....I would venture a guess that you and I are both safe from the bankruptcy trustee trying to take that money. I feel better now that I've done a lot of research on the subject and I hope you will, too.

Be sure you file with the help of an attorney and that he is aware you will be getting these benefits so he can "exempt" them right from the start. GOOD LUCK!!

Also, put your retroactive payment in a separate bank account and use that money for "necessities" and keep your receipts just in case you are forced to justify what you've spent the money on. I wouldn't spend it all just to be rid of it because you're certainly going to need it just to survive past the bankruptcy.

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My concerns about moving forward:

Thank you for your advice. I have contacted a few attorneys and none cited that law. Most were unsure, not very comforting. The attorney I am thinking of hiring cites a New Hampshire law protecting SSDI benefits. Playing devils advocate I asked him what he would do if the trustee tried to seize the SSDI anyways. I was looking for appealing the decision based on the SSDI law and/or the New Hampshire state law. What he told me is that he would flip it (his term, not mine) from chapter 7 to chapter 13 and get a dismissal. I would dodge the creditors a couple more years and re-file when there was nothing they can take. This does not give me a warm and fuzzy. Luckily you have already talked to the trustee for your case and you know they are playing it straight. I am paranoid, I do know that legally they can not touch it, but even my lawyer admitted that there are times that a trustee attaches their own moral judgment and try’s to pull a fast one. He did tell me that he had to fight with a trustee and judge over a non SSDI settlement that was protected. He said he won, but even the fact that a trustee would do this makes me nervous. I feel vulnerable. You have to depend on a lawyer because they know and understand the system. Things being that way, how do you really know your representation is competent? Reading some horror stories about others in bankruptcy getting a lawyer who did the paper work incorrectly, leaving them filed but not dismissed from bankruptcy and then refusing their calls or telling them he’s done with the case does not help. Once you find the law protecting SSDI it is pretty straight forward. What recourse does someone have should their representation fail to fulfill the job they paid for competently? From other postings it sounds like if your attorney makes a mistake, if the trustee has the preverbal hair across his….. you have no recourse.

I guess I am looking for the correct way to handle the situation should the trustee ignore the SSDI rule and the judge lets them get away with it? Does citing a state law open up vulnerabilities the SSA law would not? I am trying to head of mistakes before they happen, so as not to be stuck and not know what to do should a problem occur in the application of the law. To the lawyers and the courts we are talking peanuts, for me we are talking everything. I can not afford a mistake. Once I hand it over to a lawyer it is in their hands, how do you know you have the right one? Feel as though I am playing Russian roulette.
 



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