Social security benefits enjoy special protection under federal law. Social Security Disability and Retirement benefits may be garnished in limited circumstances. Supplemental Security Income may not be garnished at all. Even after the benefits are paid, social security deposits are generally protected from claims of most creditor. Social security benefits deposited in a bank may be exempt (protected) under under both bankruptcy and non-bankruptcy law if the funds are segregated.
Social security benefits can usually not be garnished. There are some exceptions to this which involve garnishment for child support, alimony and federal debt, such as taxes or student loans. Supplemental Security Income benefits (which are means tested benefits) are usually exempt from any type of garnishment.
Unlike wages, even after the social security benefits are deposited into a bank account, (as long as the recipient can prove the deposits are social security benefits) generally, most creditors cannot seize these funds. Depositing social security benefits into a separate account is important. If social security benefits are deposited along with other funds, such as wages, it can be difficult to prove how much of the funds on deposit came from social security benefits. The burden is on the depositor to prove what portion are social security. If a writ of garnishment is issued, taking quick action is important. Failure to timely assert one’s rights to object to seizure of social security benefits may result in waiver.
Many bankruptcy courts have held that social security funds are exempt under 11 USC 407 if the debtor is using the state exemptions. What this means is that those funds may not have to be used to pay creditors and the debtor can keep these cash funds without fear of losing them in bankruptcy.
Under federal law, filing bankruptcy may stop garnishments of social security under certain circumstances.
Information about wage garnishment is available in our debt library.
Your Next Step to Debt Relief
If you are struggling with debt, consult with an attorney who can give you guidance on options available to you. Each case is different and consultation with an attorney knowledgeable about the law as it applies to your particular circumstances is an important first step in resolving debt.
Read More About Bankruptcy and Debt Relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – Does everything that Chapter 7 does, but with the added benefit of being able to help catch up on past due mortgages, car payments, and taxes.
Taxes – If you owe money to the IRS, there may be several different options for you, including some non-bankruptcy options.
Student Loans – There are many solutions to student loan issues, including getting a better payment plan, curing a default, and even loan forgiveness.
Debt Lawsuit Defense – When a creditor sues you over a debt, you can respond with a defense, which may allow you to win the lawsuit.
Loan Modifications – A special agreement between you and your mortgage lender might help you with a past due mortgage loan.
Debt Library – More in-depth articles on some of the more detailed areas of bankruptcy and debt relief.