Social security is considered income in a bankruptcy, but it is also considered exempt. Looking at the laws of the US for social security and disability payments we look to 42 U.S. Code Subchapter II – FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS.
Under 42 U.S. Code § 407 exempts payments that deal with social security payments and disability payments Payments ( SSDI) from being taken by a bankruptcy trustee to pay debts in a chapter 7 bankruptcy.
So if you were to get a lump sum settlement for a social security payment, a bankruptcy trustee would not be allowed to take the money in a chapter 7 bankruptcy. SSDI would also be excluded from a chapter 7 means test. However, if you are looking to make payments in a chapter 13 bankruptcy the trustee will consider your social security income as a source of funds to fund your chapter 13.
If you need a better understanding of how SSDI would work with your specific set of circumstance, talk to a bankruptcy attorney to get a full view of what would happen if you or your spouse filed for bankruptcy.