Social Security Benefits Held in Bank Accounts are Exempt from Creditors and Bankruptcy Estate
In Finberg vs. Sullivan, 634 F.2d 50 (3rd Cir. 1980), the Court of Appeals for the Third Circuit held, “The money in these accounts was entirely exempt from attachment and garnishment. The Social Security Act provides an exemption for moneys paid as benefits. 42 U.S.C. § 407 (1976). See Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973) (exemption protects benefits held in checking and savings accounts).”
Residency and Bankruptcy
Filing venue. The bankruptcy case must be filed in the federal judicial district in which the debtor resided, or his principal business assets were located, for the greatest part of the past 180 days immediately preceding the bankruptcy filing.
Exemption selection. The debtor must use property exemptions based on the state in which he lived for the two years immediately the bankruptcy filing, or, if he lived in more than one state during that two years, based on the state in which he lived for the greatest part of the 180 days immediately preceding those two years. This byzantine formula was enacted as part of BAPCPA in 2005 when nightly news reports were featuring multi-million-dollar homes/compounds being built, by executives of failed giant corporations, in Florida, which, like Oklahoma, had an unlimited homestead exemption. Sometimes those rules select a state whose laws provide that only a Tax current resident of that state may claim its exemptions; in that case, the debtor may use the federal exemption list. At, John R. Bates publishes a useful guide, covering all 50 states, as to (1) “what residency status must debtor have on date of filing to quality for the applicable state’s exemptions”, (2) “which state’s law is applicable on the date of the filing of the petition”, (3) “which of the applicable state’s exemptions apply to property located outside the state”, and (4) “what residency status must debtor have on date of filing to qualify for the federal exemptions.”
Homestead exemption. In Oklahoma, the exemption of a one-acre urban homestead or 160-acre rural homestead is not limited as to amount. In a bankruptcy case, federal bankruptcy law caps that exemption at $155,675 (that figure adjusts every three years). However, if the debtor acquired the homestead more than 1,215 days before filing bankruptcy, the cap does not apply (but caution if the homestead was purchased using non-exempt funds).