“My parents didn’t want to move to Florida, but they turned sixty, and that’s the law”

– Jerry Seinfeld

Florida is well known for its warm weather, white sandy beaches, and, of course, retirees. One does not have to venture far to realize that people over the age of sixty-five (65) make up a large portion of the population. According to the most recent data, approximately 3.6 million people age 65 and older live in Florida. Although Florida is an attractive retirement destination, even the most careful retirees can find themselves in substantial debt. Older Americans are faced with significant medical expenses, unexpected job losses, and are more likely to use credit cards to assist struggling family members. As a result, older Americans have surpassed their younger counterparts in credit card debt.

Not surprisingly, social security retirement benefits have become increasingly important to these older Americans. Notably, among elderly social security beneficiaries, 22% of married couples and 47% of unmarried persons rely on social security for 90% or more of their income. This is a sizable chunk of Florida’s population, with approximately 3.1 million peoplereceiving social security retirement benefits. These trends suggest social security is an increasingly important part of life to many Floridians.

An important question for any retiree considering Chapter 7 or Chapter 13 bankruptcy is whether social security benefits will be protected. With some narrow exceptions, the Social Security Act prevents creditors from taking your social security benefits. This includes benefits that have already been received but were used to purchase a home, car, stocks, and other property. Unfortunately, for many years bankruptcy courts ignored this protection. They reasoned that the purpose of social security benefits is to provide a basic living. Anything above this minimal standard of living is a luxury. As a result, social security benefits were only protected to the extent that were necessary to provide basic welfare. Anything else above this minimal standard could be taken away by the bankruptcy court.

It was not until the Supreme Court issued its opinion in Law v. Siegel that bankruptcy courts started reversing their position on social security benefits. The Supreme Court stripped bankruptcy courts of their discretion to grant or withhold exemptions based on whatever consideration they deem appropriate. Many bankruptcy courts took this to mean that they could no longer ignore the Social Security Act bytaking social security benefits. This appears to be a resounding victory for people trying to protect social security benefits in bankruptcy. However, not every circuit has weighed in on how to interpret the Supreme Court’s decision. As a result, anyone considering Chapter 7 bankruptcy or Chapter 13 bankruptcy should only consider hiring a good bankruptcy attorney.