Are social security and pension funds affected by bankruptcy?

Full question:

Are monthly social security funds and monthly retirement pension funds effected by bankruptcy?

• Category: Bankruptcy
• Date: 04/07/2025
• State: Texas

Answer:

When a person files for bankruptcy, certain assets become part of the bankruptcy estate and are used to pay off unsecured creditors. However, some assets are exempt and do not become part of the estate. Exempt property includes:

• The right to receive social security benefits, unemployment compensation, or local public assistance benefits;
• Veterans' benefits;
• Disability, illness, or unemployment benefits;
• Alimony, support, or separate maintenance necessary for the debtor's support and their dependents;
• Payments from stock bonus, pension, profit-sharing, annuity, or similar plans due to illness, disability, death, age, or length of service, as long as these are necessary for the debtor and their dependents' support, unless the plan was established by an insider employer at the time the debtor's rights under the plan arose, or the payment is based on age or length of service, and the plan does not qualify under specific sections of the Internal Revenue Code (sections 401(a), 403(a), 403(b), or 408).