Are Food Stamps Considered Income in Bankruptcy Filings?

When you go to file bankruptcy, the court considers your income to determine whether or not you qualify for a Chapter 7 bankruptcy, and in the case of filing a Chapter 13 bankruptcy, to determine the amount of your monthly payments.  Obvious income would be wages earned from employment, self-employment income, social security and child support; but what about government assistance such as food stamps?  In short, food stamps are considered as income for the purposes of a bankruptcy.

Young boy holding the hands of his parents.

The Means Test in a bankruptcy considers most income that you receive: wages, self employment, child support, family support, retirement withdrawals. When you receive food stamps, the monies go straight to a debit card in which you can only use to purchase food in a store that accepts the card.  You cannot get cash back from the card?. However, for the purposes of the Means Test, it is still considered income. Since you can use the governmental assistance to purchase necessities, such as groceries, it is considered to be a part of your monthly income that is calculated under the Means Test. Therefore, it needs to be accurately reflected in both the Means Test and in Schedule I, which is the section that discloses your income to the courts.

What Is Income for Purposes of the Means Test?

Wait a second…I have to qualify to file bankruptcy?  Isn’t it enough that I just simply cannot pay my bills?  How do I determine whether or not I would qualify?  The answer is simple enough: the Means Test.  What is the Means Test you might ask?  The Means Test is a formula used to determine your ability to pay back all of your debts.  This will help determine whether or not you qualify for a Chapter 7 bankruptcy or if you will need to pay back some of your debts and file a Chapter 13 bankruptcy.   The Means Test will take in consideration all of the income coming into the home, as well as some of the expenses that are coming out.

What is considered income for the purpose of the Means Test? Here are the most common types of income that factor into the Means Test:

Types of Means Test Income

W2 Wages/TipsSelf Employment Income (this also includes babysitting income)
Family SupportAlimony
Income from Rental PropertiesChild Support
401k / IRA / Life Insurance WithdrawalsTrust Accounts


Almost all income is considered for the purposes of the Means Test. However, there is a small number of sources of income, generally those that derive from the federal Social Security Act, that are not considered for Means Test purposes.

The Means Test regularly changes requirements for each state, currently, North Carolina is as follows:

Household Size:Median Income for Means Test:


Make too much?  Before you get discouraged, there are “qualified” deductions that help bring down that means.  Some qualified deductions are: taxes, medical insurance, life insurance premiums, mandatory deductions from you pay, charitable contributions, court ordered payments, and out of pocket co-pays and prescriptions.

You will need to sit down with your bankruptcy attorney and let them run a complete Means Test on you to determine whether or not you qualify at this time.  Looking at the past six months of pay stubs or a profit and loss will help an attorney determine whether or not you are able to pass the Means Test.


Are Social Security Disability Benefits Protected in Bankruptcy?

Senior Couple | Social Security Disability in BankruptcyThe short answer is yes, you can still receive Social Security benefits if you are to file bankruptcy.  Whether filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, your social security benefits are not affected by filing for bankruptcy.

Impact on the Means Test

North Carolina bankruptcy laws are based upon the qualifications of the Means Test.  Social Security benefits are not calculated into the Means Test and therefore, are not a factor upon whether or not you qualify to file for bankruptcy.

Are My Social Security Benefits Protected?

Any future earnings received from Social Security benefits such as a disability claim or settlement are usually protected by state exemptions which protect your assets.  Any large lump sum you may have received within six months prior to filing your bankruptcy petition may be at risk and the trustee’s office may try to seize those funds in order to repay your creditors. However, there is the possibility the lump sum payment can be protected by using the proper exemptions.

How Social Security Benefits Will Impact a Chapter 13 Bankruptcy

If you intend on filing a Chapter 13 bankruptcy, you will be on a repayment plan based upon your monthly income versus expenses.  Your Social Security benefits will be calculated into your monthly repayment plan.  If you expect to receive a Social Security Disability award and intend on filing a Chapter 13 bankruptcy, this could affect your monthly income and your budget may need to be amended.

In any case, you need to consult with a Bankruptcy attorney to review your options when filing your petition.  The attorney will give you a clear perspective of what type of bankruptcy you would most likely want to file and which one you are probable to qualify for according to the Means Test.