Your creditors are taking you to court for the money you owe. Creditors who win a judgment can obtain a court order to garnish your wages or bank account. If you receive benefits from the Social Security Administration, you may be wondering if those can be garnished as well.
There are limits to how much creditors can garnish each month, and many federal benefits, like Supplemental Security Income (SSI), are protected from garnishment. If SSI is safe, what about Social Security Disability Insurance (SSDI)?
Depending on the type of debt you owe, your SSDI benefits could be garnished. Learn more about SSDI and garnishment.
When Is SSDI Exempt from Garnishment?
Can Social Security disability be garnished for medical bills or credit card debt? Disability benefits are protected from “regular” creditors. SSDI cannot be garnished for medical bills, credit card debt, car loans or other personal loans. If you are being sued for these types of debts, your SSDI benefits are safe. A court can still order to garnish extra money in your bank account, but they cannot garnish your benefits.
Benefits & Direct Deposits
Social Security benefits that are deposited directly into your bank account have automatic protection. Your bank will examine your accounts to see if you’ve received benefits over the last two months and automatically protect two months’ worth of benefits from garnishment. Any extra money will be frozen or garnished.
For example, if your account holds $4,000 and you receive $1,000 in monthly SSDI benefits by direct deposit, $2,000 will be available to you because that’s two months’ worth of your benefit. The other $2,000 will be frozen.
Receiving Benefits as Paper Checks
Those who receive paper checks by mail and deposit them into their bank accounts do not have automatic protection. Your bank can freeze your entire account—including two months’ worth of your benefits. You will need to provide documentation that the money you deposited came from federal benefits.
When Can SSDI Be Garnished?
Though your SSDI benefit is likely safe, there are exceptions to the benefit’s protection. Certain types of debt may affect your SSDI benefit. Your benefit can be garnished if you are sued for child support or you owe the federal government money.
SSDI can be garnished for the following:
- Child support
- Court-ordered restitution
- Back taxes
- Federal student loans
- Federal home loans
Limits to Social Security Garnishments
Garnishment will not take your full benefit. There are limits to how much of your benefit can be garnished each month.
Child Support or Alimony
If you owe child support or alimony, up to 60% of your benefit can be garnished according to the Consumer Credit Protection Act (CCPA). Those with other dependents, like a child from a second marriage, receive more protection. If you currently support another child apart from the subject of the court order, you can only have up to 50% of your Social Security benefits garnished.
Have you not paid child support for more than 12 weeks? Then, the court can order to withhold an additional 5% of your benefits from you.
States can offer different limitations and protections in regard to child support and alimony. Missouri follows the CCPA and does not provide additional protections.
Federal Income Taxes
Behind on your taxes? The IRS can garnish no more than 15% of your monthly benefit until the debt is repaid. Government agencies, like the IRS, do not have to obtain court orders to garnish SSDI benefits.
Have you been unable to pay off federal student loans? If you default on your student loans, the government can take 15% of your monthly benefit to recover the debt. Luckily, there is a safety net with student loan garnishments—you must be left with $750 in benefits each month.
How Are Benefits Garnished?
Debt collectors cannot take benefits directly out of your accounts without a court order. If a creditor obtains a court order, it will be sent to your bank and your bank will review your accounts. The bank must send you a notice about the garnishment that shows how much will be taken from your account.
You should talk to a lawyer if you’re confused about garnishments or think your benefits have been garnished unfairly.
Are you worried about repaying your debts? Are your creditors taking you to court?
Contact Reynolds and Gold. We will answer your questions about bankruptcy and Social Security as we help you explore your options.