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Chapter 13 bankruptcy and unemployment benefits

South Carolina residents who are considering filing for Chapter 13 bankruptcy might be interested to learn that in another state, a couple was not permitted to exclude unemployment payments from their current monthly and disposable income. With Chapter 13 bankruptcy, a debtor may keep some assets while paying them off under an approved payment plan. In New Mexico, a couple argued that the unemployment payments should be exempt because they are a benefit under the Social Security Act.

According to the Bankruptcy Code, benefits that are received under the Social Security Act should not be included in calculating income. However, courts have made different rulings about whether unemployment payments should be included. The New Mexico court concluded that since the state decided unemployment eligibility and payments were administered by the Workforce Solutions Department, they were not received under the Social Security Act.

Under the Social Security Act, states are left with a significant amount of freedom to set eligibility and other conditions for receiving unemployment. Both federal law and the Social Security Act impose limitations on state law.

Chapter 13 bankruptcy is one option for debt relief, and people who are considering it might want to speak to an attorney about whether they would be good candidates for bankruptcy. Some people may hesitate to file for bankruptcy because they are concerned it will ruin their credit or that doing so is irresponsible. However, unpaid debts also hurt a person's credit. After filing for bankruptcy, people can start rebuilding their credit, and eventually, the bankruptcy will fall off the credit report. Furthermore, filing for bankruptcy can be a financially responsible decision.

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The Huggins Law Firm, PA

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