Is Social Security counted as income in the means test under the new bankruptcy law?
No. Social security payments are excluded from the calculation of income for purposes of the means test. It’s important though not to comingle social security income—so that the social security income is not confused with other types of income that are not excluded. If you deposit all of your income into a single account, make sure that you keep good records so that you can identify which proceeds are attributable to which type of income. For example, you receive social security check by direct deposit each month in the amount of $800.00. You also have a part-time job which varies in amounts each week depending on the hours you work. Make sure you track which part of the funds in your checking account derive from social security and which derive from your part-time job.
Some consumer bankruptcy lawyers believe that unemployment compensation derives from the Social Security Act and should also be excluded from Current Monthly Income. Because this is a commentary on the law, instead of a direct exclusion contained within the code, its interpretation will vary from state to state. Since the 2005 amendments of the bankruptcy court, some courts have ruled that despite unemployment compensation being derived from the Social Security Act, it is still income for purposes of the means test. The reasoning is that the benefits are designed to replace income and are, therefore, income for purposes of the means test. Be sure to consult with an attorney in your jurisdiction to see how these benefits are treated in your state before you file your petition.