Is SSI income exempt from creditors in a bankruptcy case?
In Virginia, a creditor must first obtain a judgment for money owed them before asking for a lien on your personal property, including SSI Benefits. If a judgment is obtained, then the creditor can ask for a lien to be placed on your assets. Virginia places a lien on all real estate in the same county as the judgment lien is recorded, and, the creditor may request a Writ of Fieri Facias to be put into the hand of the sheriff once the judgment is entered, which enables them to have a state sheriff levy on your tangible personal property – that is, seize it and auction it for value. The fieri facias also creates a lien on all intangible assets owned by the debtor, but a notice of lien must also be served on your bank where your accounts are maintained to assert the lien against those intangible assets.
Fortunately, under Federal law, your Social Security Income benefits, and Supplemental Security Income benefits are exempt from levy or attachment by your judgment creditors. However, to perfect the exemption, you need to file a homestead exemption form with the court where your creditor filed its garnishment petition, and show the court that the fund being garnished are in fact sourced from SSI Benefits or Social Security Benefits. Many people do not take the time to present this important evidence, and may lose their SSI funds as a result.
In addition SSI exemption under federal law, even your bank funds that did not come from SSI can be exempted using the general Homestead Exemption under Virginia law. You are entitled to certain statutory Homestead Exemptions, which protect your property from the actions of creditors. You are permitted to hold exempt from creditor liens and levies a number of items, including household goods and furnishings of up to $5,000.00 in value, wearing apparel of up to $1,000.00 in value, one firearm of up to $3,000.00 in value, and one motor vehicle of up to $6,000.00 in value, from creditor process. Doing so will also prevent any officer of the court, including the sheriff, from levying on your property. You are not required to set such exemptions ahead of time, but will have to get a court hearing should the property be levied on despite the exemption. It is therefore unlikely that most creditors will bother, as it is unlikely that your non-exempt assets will be sufficient to support a levy.
Again, be sure to seek advice of a lawyer, as you will have to record a homestead deed to perfect your right to exempt any assets under the General Homestead Exemption law in Virginia. In many cases, it will be better to file bankruptcy than to use up your homestead exemptions, if the likelihood of addtional judgments exists.