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Under IL law are SSDI lump sum back pay funds exempt in a Ch 7 bankruptcy?As funds have already been spent

Belleville, IL |

IL laws regarding SSDI lump sums and Ch7 bankruptcy

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Attorney answers 4


If the funds wwere already spent there is no exemption because the property no longer exists. Generally money from SS is exempt.

The chapter 7 Trustee may be able to go after the creditor to hom you paid the money however.

Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.


SSDI and its proceeds are protected from creditors, even lump sum payments. Once you pay it to someone, it may not be especially if that payment is considered a preference.

Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.


Generally, those proceeds are exempt. Once they are in your account, they may not be. If you spent the proceeds on everyday normal living expenses, and did not pay them to a creditor, you will probably be fine as long as you can prove that you spent those proceeds on normal everyday living expenses. If you paid a creditor, then it is a preference to that creditor and the Trustee is entitled to disgorge that money from the creditor and disburse it amongst all creditors.


Typically, SSDI funds are exempt from creditors. However, if the funds are already spent, there is nothing to claim as exempt on your bankruptcy petition.

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