Can Creditors Seize Your Social Security Disability Benefits?
Generally
speaking, the law protects your Social Security benefits from
garnishment by creditors. There are exceptions, however. The law does
not protect you from the federal government itself. If you default on a
federally guaranteed loan, such as a student loan, your Social Security
disability benefits may be garnished to pay for the delinquent debt.
Your
benefits can also be garnished to pay for child support or past due
alimony. However, you must have at least $750 per month left after any
garnishment.
It's a different story if you owe federal income tax. The government may seize all of your money to satisfy a tax lien.
If
you receive Supplemental Security Income (SSI), these benefits are
totally exempt from garnishment by anyone, including the government.
Just
because your Social Security check is not subject to garnishment
doesn't mean that creditors won't try to seize your money. If they get
their hands on it, you probably won't get it back, even if it was taken
illegally. So, take some precautions now.
The
best thing to do is put all of your Social Security income into a
separate bank account and put no other money into that account--not even
one cent. That way, it is easy to prove that all of the money in the
account came from Social Security. This makes it much, much easier to
defend against garnishments and seizures. Never mix Social Security
money in the same bank account with any other income or funds.
If you think that a creditor may try to seize or garnish your bank account, notify an officer of the bank (not a teller, an officer) that all of the money in your account is Social Security money and that it is exempt from garnishment. Try to do this before
the garnishment is attempted. That way, the bank is aware of the
protection (hopefully) and will not allow your money to be frozen or
seized in the first place.
