Can Your Social Security Disability Benefits Be Garnished?
Creditors generally can't garnish your SSDI benefits thanks to federal and state protections. Exceptions exist for child support, alimony, federal taxes, criminal restitution, and federal student loans. Bankruptcy can provide additional protection if you face garnishment from these debts.
Get Free ConsultationYou need to know: Social Security Disability Income (SSDI) benefits have strong protection from garnishment. Creditors can’t take this money for most debts. Exceptions exist for child support, alimony, federal taxes, and federal student loans.
Credit Card Companies Can Sue You While You Receive Disability
Yes, credit card companies can sue you if you receive disability benefits. Your federal benefits don’t stop lawsuits from happening. But winning a lawsuit doesn’t mean they can collect.
Stop Creditors From Taking Your Disability Benefits
Chapter 7 bankruptcy can eliminate unsecured debts and permanently stop collection efforts. Get a free consultation with a bankruptcy attorney to see if you qualify for debt discharge.
Check Bankruptcy EligibilityYou might be judgment-proof if SSDI is your only income. Creditors can sue you and win. They still won’t collect anything. Your income and assets have legal protection.
Being judgment-proof doesn’t stop collection calls or letters. You still owe the debt plus interest. Your situation could change later. Creditors may try to collect then.
You can send a judgment-proof cease and desist letter to collectors. The letter explains your protected status. It requests they stop contacting you. The Fair Debt Collection Practices Act requires collectors to stop when you ask.
If you’re being sued for debt, our partner Solo can help you respond to the lawsuit and protect your rights.
Disability Benefits Have Strong Protection From Creditors
Federal law protects disability payments from most creditors and collectors. Private creditors like banks and credit card companies can’t touch them. Exceptions exist for specific government debts.
Your benefits can be garnished for unpaid child support. Alimony obligations can also trigger garnishment. Federal taxes and federal student loans are exceptions too.
The Consumer Financial Protection Bureau recommends direct deposit for protected funds. Direct deposit creates automatic protection for your benefits.
Protected federal benefits include:
- Social Security benefits
- Supplemental Security Income (SSI) benefits
- Veterans benefits
- Civil service and federal retirement benefits
- Servicemember pay
- Military annuities and survivor benefits
- Federal student aid
- Railroad retirement benefits
- FEMA financial assistance
Keep your disability benefits in a dedicated bank account. Don’t mix them with other income sources. Separation makes protection easier to prove.
Understanding Social Security Disability Benefits
SSDI benefits come from the Social Security Administration. The program serves qualified workers who can’t work due to disabilities. Eligibility depends on your age and work history.
You must have paid into Social Security for enough years. Your benefit amount reflects your pre-disability income. The more you earned, the higher your monthly payment.
The Social Security Administration distributes other benefits too. You might receive retirement benefits, survivors’ benefits, or SSI payments. Some people get multiple benefit types at once.
Garnishment rules apply similarly across Social Security benefit types. SSI payments have additional protections beyond SSDI benefits.
How Garnishment and Bank Levies Work
Creditors can sue you for unpaid debts. A court issues a judgment if the creditor wins. The judgment allows the creditor to pursue collection methods.
Garnishment takes income before you receive it. Wage garnishment is the most common type. SSDI benefits can face garnishment too, but only in limited cases.
A bank levy takes money from your account. The creditor seizes funds you’ve already received. Banks must follow specific rules before processing levies.
States use different terms for these collection methods. Some use levy and garnishment interchangeably. In this article, garnishment means taking benefits before receipt. Levy means taking money from your bank account.
Creditors usually need a court order for garnishment or levy. Exceptions exist for child support and back taxes. These debts allow collection without court involvement.
When Creditors Can Garnish Your Disability Benefits
Federal law prohibits most private creditors from garnishing SSDI. Banks and credit card companies can’t touch your benefits. Most state laws include similar protections.
Specific debt types override these protections:
Back Taxes
The Treasury Department can take up to 15% of your benefit. Federal tax debt triggers this garnishment. State tax agencies may have similar authority.
Child Support and Alimony
Your state determines the maximum garnishment amount. Courts can take up to 60% of your benefit. The limit rises to 65% if you’re 12 weeks behind.
Criminal Restitution Payments
Courts can garnish up to 25% of your total benefit. Your state’s laws determine the exact amount. Past-due restitution payments trigger this collection.
Federal Student Loans and Other Government Debts
Federal agencies can take up to 15% of your benefit. You must still receive at least $750 per month. Other federal debts follow the same rules.
Protecting Your Disability Benefits From Collectors
SSDI benefits have protection from most garnishments and bank levies. Some protections work automatically. Others require you to take action.
Automatic Bank Account Protection
Banks must check for federal benefits before processing levies. They look for Social Security deposits from the past two months. The bank calculates a protected amount based on these deposits.
The protected amount equals recent benefit deposits or your current balance. The bank uses whichever number is lower. Creditors can’t touch this protected amount.
State Exemption Laws Provide Additional Protection
Your state’s exemption laws might protect benefits the Treasury rule doesn’t cover. Every state shields certain property from creditors. SSDI benefits typically qualify for this protection.
The protection isn’t automatic under state law. You must act quickly when you receive a levy notice. Inform the court that your account contains exempt benefits. Provide evidence that your funds qualify for protection.
Keep SSDI benefits in a separate account from other money. Separation simplifies proving all account funds are protected. Courts process exemption claims faster with clear documentation.
Some Debts Override All Protection
State exemptions and automatic protection don’t apply to certain debts. Creditors can levy SSDI for back taxes and child support. Overdue alimony and criminal restitution also override protection. Other federal debts can access your benefits too.
Creditors who can garnish benefits directly can also levy bank accounts. Understanding which debts affect your SSDI helps you prepare. Get legal advice if you’re concerned about garnishment.
Bankruptcy Protects SSDI Benefits From Garnishment
Bankruptcy offers protection when other options fail. The automatic stay stops all collection actions immediately. Garnishment and levy proceedings must halt when you file.
Many debts get discharged in bankruptcy. Discharge eliminates the debt permanently. Even non-dischargeable debts benefit from the automatic stay. You gain time to negotiate payment plans with creditors.
Being judgment-proof means creditors can’t collect judgments against you. You still owe the debt plus accumulating interest. Collection calls and notices continue. Your financial situation could change later.
Bankruptcy wipes out eligible debts for good. Limited income and assets make qualifying easier. You can protect your assets through exemptions. SSDI recipients often qualify for Chapter 7 bankruptcy.
If you’re overwhelmed by debt you can’t pay, speak with a bankruptcy attorney for free to explore whether Chapter 7 bankruptcy could eliminate your debts and stop collection efforts.