I'm getting mixed signals about whether my Military Disability is usable in a chapter 7 bankruptcy, does anyone know for sure ?

Asked over 1 year ago - Gardner, KS

I receive Social Security and Military Disability and I'm just needing to know if they are usable in filing a Chapter 7. I know Social security is not used and I did not incure any of the debt while in the military, I was discharged in 1971. My wife makes $30,000 more than the states median allowed. According to what I've read, Miliary Dis. is not counted as an income, as far as taxes are concerned, so why would it be counted in a bankruptcy?
I do have a lawyer on a retainment, but have not paid the full fees, because I'm not sure we will go with his firm yet. He said we wouldn't have to take the means test, I called in to his firm and talked to another attorney and he said we'd probably have to count my Military Dis. along with my wifes salary. Debt is credit cards and pay day loans

Attorney answers (3)

  1. William P. Turner

    Contributor Level 7

    6

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    Best Answer
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    Answered . Income from Military Disability will count as income on the means test. Benefits from the Social Security Act are exclued from said income, but military disability, as contrasted with social security disability, is not a a benefit from the Social Security Act. If your wife is 30k above median income, than you are taking the means test in any case.

  2. David Eli Larson

    Pro

    Contributor Level 15

    2

    Lawyers agree

    Answered . I agree with Mr. Turner, your military disability pay will be counted as income in the means test along with your wife's income, and the result may be that you will not be eligible for a ch 7. You will still be eligible for a ch 13 payment plan, however, and, in most cases, my clients in similar situations to yours, have found the ch 13 plan payments tolerable, especially when compared to the debt loads they carry. All of your income, including the Social Security will be included on your Schedule I and will be compared to your expenses on Schedule J.

  3. Dorothy G Bunce

    Pro

    Contributor Level 20

    2

    Lawyers agree

    Answered . You must disclose all of your income from every source on your bankruptcy petition. You can, however, omit the social security income from the Means Test calculations. Income needs to be disclosed on Schedule I and on questions 1 & 2 in the SOFA. Hope this perspective helps!

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