Monthly Archives: August 2014

Social Security and Bankruptcy

Social Security income in bankruptcy should be a well-settled issue now in bankruptcy court.  Social Security benefits do not count as income.  Several US Circuit Courts of Appeals have held that the debtor does not have to use Social Security income to pay creditors during a chapter 13 plan.  Social Security income does not count as “projected disposable income”. I have filed several chapter 7 cases even though the debtor’s actual budget shows that he or she could make payments to creditors.   I have not received any objections until recently in one case.  The US Trustee claimed that the ability to pay was a basis to contest in a chapter 7 even though the ability was based on social security.  Ultimately, the US Trustee withdrew its motion to dismiss.  There remains a possibility the US Trustee could object in a future case.  There have been no rulings in the…
Read More »

Posted in Bankruptcy Information, Bankruptcy Planning | Tagged | Leave a comment

Assignment for the Benefit of Creditors

Assignment for the Benefit of Creditors is a state court procedure that has many benefits over a corporate chapter 7 bankruptcy.  A small business with no assets often does not need any court procedures and can just shut the doors.  A business with substantial assets may want to have a proper method of winding down the business.  If the company files a chapter 7, an independent bankruptcy  trustee will liquidate the assets.  The chapter 7 trustee will also thoroughly analyze possible transfers of assets to friendly creditors or to the owners of the business.  In an assignment for the benefit of creditors (ABC), the debtor company makes an agreement and selects the company who is going to liquidate the business assets.   The assets of the company are actually transferred to the liquidator. Additionally, the liquidator might need to pay for some time the principals of the debtor to assist…
Read More »

Posted in Bankruptcy Information | Tagged | Leave a comment