It is not abnormal for most of my clients to tell me they are considering filing for bankruptcy. In fact, in most situations I expect it. The reason being you are not working, so your financial resources are most likely limited. Bankruptcy is the logical next step. I recently had a client ask whether filing for bankruptcy would affect her claim for disability. In one word the answer is no.
When determining if you are eligible for Social Security disability benefits (SSD) the Social Security Administration (SSA) checks to see if you meet both the technical and medical requirements for the insurance program.
The medical requirements analyze what your functional capacity is. Meaning, what is the most you are able to do physically and psychologically despite your limitations. The technical requirements include checking to see if you have paid enough into the Social Security system to have insurance coverage. The other technical requirement includes whether you are working and earning an income above the substantial gainful activity (SGA) level. When you first file your application, the SSA does a technical requirements evaluation. If you meet the technical requirements then an evaluation of the medical requirements will be done. The medical analysis is typically where the long wait period comes into play.
What is the substantial gainful activity?
As noted, earning over SGA is one of the ways you will receive a technical denial. Substantial gainful activity (or SGA as it is commonly referred to) is defined as the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. In short, this means if you are working and earning more than the set SGA amount for that year then you will not be eligible for SSD benefits. For 2015 the monthly SGA amount is $1,090. This is the monthly gross amount from your paycheck — Not to be confused with the net amount.
For any earnings to be considered SGA they must be income that you have earned from working at a job. Examples of “work” that are not counted as SGA include performing activities of daily living, volunteer work, performing hobbies, attending school or even receiving a settlement from a personal injury case.
This is why filing for bankruptcy has nothing to do with your filing for SSD benefits. Applying for disability benefits can be frustrating and confusing, especially since you are dealing with a government agency that is well understaffed. I 100% recommend you find a Social Security disability attorney whom you are comfortable with and that you trust to handle your claim. Retaining the help of a disability attorney will help set your mind at ease, so you can focus on your health problems and any other matters you may have, including filing for bankruptcy. Everyone can afford to hire a disability attorney since there is no out-of-pocket cost. Your attorney only gets paid if they can help you obtain benefits.