CAN YOUR SOCIAL SECURITY BE GARNISHED?

THINKING RETIREMENT – ANDY LANDISSocial Security is exempt from most garnishment.  But it can be seized under certain circumstances. If times are tough, it’s important to ask: Are your Social Security payments subject to garnishment?  Could a creditor seize them?  Could you lose them in bankruptcy?

In fact, Social Security payments are protected from many kinds of garnishment.  Specifically, Section 207 of the Social Security Act http://www.socialsecurity.gov/OP_Home/rulings/oasi/41/SSR79-04-oasi-41.html ] says that payments are not “subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”  That sounds like it covers everything, right?  Surprise—there are exceptions, listed below.

In the past, creditors would circumvent that law by garnishing your bank account.  Creditors couldn’t touch your Social Security itself, but they would effectively control it the moment it arrived in your account.  That dodge was eliminated in 2011 by federal regulation [http://www.consumerfinance.gov/askcfpb/1157/can-creditor-garnish-my-social-security-benefits-pay-debt.html ].  Now the last two months of payments are exempt from garnishment, if they were directly deposited to your account.

By the way, these same protections apply to Supplemental Security Income (SSI) benefits, Veteran’s (VA) benefits, Railroad Retirement benefits, and benefits from the federal Office of Personnel Management.  Note, however, that protections do not apply to direct deposits over two months old, nor to any funds moved to another account.

There are other exceptions.  Your payments can be garnished, levied, or offset in these cases [http://ssa.gov/OP_Home/handbook/handbook.01/handbook-0129.html ]:

  • Unpaid federal taxes
  • Unpaid court-ordered child or spousal support
  • Court-ordered crime victims restitution
  • Other debts to federal agencies, such as student loans owed the Department of EducationThe bottom line is that your Social Security is safe from most creditors…but don’t mess with family court or Uncle Sam.Need help with bills?  Start with the FTC’s “Choosing a Credit Counselor” site [ https://www.consumer.ftc.gov/articles/0153-choosing-credit-counselor ].  Also consider the National Foundation for Credit Counseling [ www.nfcc.org ]  and the National Association of Consumer Bankruptcy Attorneys [ www.nacba.org/ ].READ MORE HERE.

And as always, keep on planning.

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