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Can Social Security Disability Be Garnished?

George Simons | December 01, 2022

Don't let debt collectors take your benefits.

Summary: Got a debt collector threatening to garnish your Social Security Disability? Find out if they can even do that and how to stop them.

If your primary source of income is Social Security disability benefits, you may be worried, and rightfully so, about any outstanding debts that you may have. You may be concerned about earning a living while you are physically incapacitated if your Social Security disability benefits are garnished to pay off your debts.

The question is, can your creditor use a court order to garnish your Social Security disability benefits to settle your debts? To answer your question, you will need to understand the law and your rights before making the best plan to manage your debts. This article will do just that.

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What Are Social Security Benefits?

The Federal Social Security Administration gives out financial benefits called Social Security benefits to eligible American citizens based on their inability to earn income to sustain themselves and their families due to disabilities or retirement.

There are three forms of Social Securities. They include:

  • Supplemental Social Security Income (SSSI): These are funds given to eligible disabled adults over 65.
  • Social Security Disability Insurance (SSDI): Funds given to physically disabled adults who cannot work because of their condition.
  • Social Security Retirement Benefits (SSRB): Income for eligible retired people and their families.

The federal government makes these payments to beneficiaries directly into their bank accounts or a government-issued credit card.

Are Your Social Security Benefits Safe From Creditors?

Legally speaking, any person who takes out a loan or credit is obligated to pay them back as per the terms of the lending agreement. If the person fails to pay the loans, the creditors may sue them to recover their money.

A ruling in favor of the creditors may result in either of the following judgments:

  • Bank account levies: The court orders the debtor's bank to withdraw money from their account without requiring their permission to pay for the loan
  • Garnishments: The court orders a portion of the debtor's income or property be directly paid to the creditors without passing through the debtor (except for child support, entitlements, alimonies, and benefits)
  • There are some cases where neither of these two judgments applies in a case. In that case, the court may render the debtor as being judgment proof.

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    What It Means to Be Judgment Proof

    When a court cannot pass a garnishment or bank account levies on your case, then you are judgment proof. This situation only occurs if the court is convinced of the following:

    • You have very little income
    • You have no wages to garnish
    • You only have legally protected assets
    • Your main source of income is the federal Social Security benefits

    The creditors, or collection agencies working on their behalf, will not have a garnishment order or a bank account levies if the debtor's situation is as described above.

    Sometimes, people put together their federal government's Social Security benefits with other private retirement benefits. When that happens, the court may order that some portion of their income be directed towards paying off their debt.

    It is always a good idea to separate your entitlements, alimonies, and other retirement benefits from the Social Security Benefits to avoid such situations.

    One misconception about being judgment proof is that you will no longer be required to pay your debts. This is not true; in fact, you should be concerned about your credit report and credit scores.

    A judgment proof ruling only informs the creditors that you do not have sufficient assets and income to pay off the debt, and it may be pointless to pursue you in court. However, being judgment proof does not stop creditors from making persistent calls, emails, letters, and other debt collection tactics to make you pay them.

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    Exceptions to Being Deemed Judgment Proof

    There are exceptions to being deemed “judgment proof.” Essentially, the state and federal governments may garnish your Social Security benefits if you owe them without needing a court order to do so. The following agencies can garnish your Social Security benefits:

    The Internal Revenue Services (IRS)

    The IRS can collect a portion of your monthly entitlement to settle your outstanding taxes without a court order. The IRS must inform you, in writing, about their plan to collect their money from your Social Security benefits before doing so.

    Federal Student Loans

    Federal Student Loans Servicers may also take a portion of your social security benefits to pay for the student loans without needing a court order. If you are a co-signer to a student loan beneficiary, this may also happen to you if the student fails to pay off their student loans. In most cases, older people bear the burden of paying out student loans for young borrowers who fail to pay back their student loans.

    What Happens to Your Social Security Benefits If You File for Bankruptcy?

    If you ever received too much money for your Social Security benefits from the federal government, they may garnish your benefits to recover their money back. This option is very common with the Social Security Income beneficiaries.

    Persons eligible for disability benefits may apply for Chapter 7 bankruptcy. The bankruptcy code relieves you from any outstanding debts you may have, including credit card debts, medical debts, and any debts not tied to a property. This filing is usually processed within 90 days after approval.

    Remember to separate your Social Security benefits from your other benefits accounts so that you do not complicate your case. The complication arises because the disability income, such as the Social Security benefits, are regarded as bankruptcy exemptions as long as they are not mixed with other incomes.

    Filing for bankruptcy might be the best solution for debt management if you entirely rely on Social Security benefits as your source of income.

    In a nutshell, a creditor cannot secure a court order to garnish or put bank levies on your social security benefits if it is your only source of income.

    Only the federal or state governments can garnish your Social security benefits without needing a court order if you owe taxes, student loans or if your account was mistakenly overpaid. Generally, Social Security disability beneficiaries are judgment proof.

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