Chapter 7 Protects Social Security Disability Income

Sherry’s only source of income is Social Security Disability, and she receives less than $1400 per month. She filed a Chapter 7 bankruptcy in 2010, and since that time managed to live within her means despite her very limited income. Then, one day, entirely “out of the blue” she received a law suit for $40,000. It seems a family member that Sherry gave a car to had gotten into an accident and hurt someone. That family member did not have insurance on the car, but the title was still in Sherry’s name. In Michigan, a person injured in a car accident can sue the owner of the car for their injuries, even if the owner was not driving the car. The cost of defending the lawsuit would have been thousands or even tens of thousands of dollars, and Sherry could not file for Chapter 7 bankruptcy protection because she had filed in 2010. We were able to get Sherry into a Chapter 13 that would protect her from the lawsuit and discharge the $40,000 debt, with a court approved payment of only $102 per month for three years.

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