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Bankruptcy and disability benefits: questions and answers

On Behalf of | Dec 3, 2020 | Long Term Disability Claim Denial

Is long-term disability ever a factor in bankruptcy considerations and outcomes?

Indeed, it is, which is a point we explicitly note at the national ERISA Law Center’s disability legal offices. We stress on the firm’s website that, “Loss of income and high medical expenses are two of the most common factors that force disabled people into bankruptcy.”

Candidly, making sound decisions concerning bankruptcy and an ultimate decision to invoke the bankruptcy process entails marked complexity under any circumstances. Proceeding smartly and logically can understandably be an exercise that is rendered even more difficult for an individual suffering from a disabling condition.

A proven and empathetic legal team can help make things easier, while providing clear guidance and, when necessary, diligent legal representation every step of the way.

Here is an initial and key point to note for a disabled individual seeking to file for bankruptcy, which we underscore on our website: “You need to properly list your benefits or claim in your bankruptcy schedules.” Those forms are federal U.S. Bankruptcy Court documents, which will be closely scrutinized for accuracy in any filing.

Schedule 1 is one centrally important form. It mandates data input relevant to every present source of income, including identification of a payer making disability payments and the monthly amount of such income.

Schedule A/B (which now supersedes Schedule B) is also applicable in many cases. Persons with a disability claim list all the property they own on this form, including amounts receivable that are linked to disability insurance payments. Contingency claims for benefits that have been terminated prior to bankruptcy filing or following filing but prior to discharge must be entered on this document.

The specifics surrounding disability claims/payments and bankruptcy are often unclear and muddled for prospective filers. An experienced disability attorney can shed light on the process and provide results-oriented advocacy.