Typically when you file bankruptcy, your income and savings becomes part of your bankruptcy estate. The trustee will take any non-exempt funds and use them to pay off your creditors. Most of the time, social security disability income is protected from this type of trustee action by both bankruptcy laws and the Social Security Act. However, there are two times when the trustee can take that money. Here's more info about these exceptions.
- Coming to the realization that you need to file a Chapter 7 bankruptcy usually doesn't happen suddenly. Typically, people in financial distress severe enough to contemplate bankruptcy spend many sleepless nights worrying about how to pay their bills and they avoid answering phone calls because they may be from creditors. During this time, they may unknowingly make mistakes that could cause problems when they do file for bankruptcy. If you are beginning to realize that a bankruptcy filing is on the horizon, you'll need to avoid doing the following things.
- If you've recently made the decision to close your small business due to inadequate cash flow or low profit, you may be feeling equal parts dismay and relief. However, depending upon how quickly you began the closing process when you realized your business was unsustainable, you may not have enough excess cash to pay even the final bills -- including your business's income and payroll taxes for the last few months.