- Judgment-creditors may not garnish Social Security benefits.
- Federal agencies can "off-set" Social Security benefits.
- Social Security funds in an account with no others may not be levied.
BILL'S ANSWER
This is a very common question to Bills.com and the Social Security Administration. I encourage you to take the time read my response carefully. This response provides a clear answer to your question.
According to the Social Security Administration Web page Garnishing Social Security benefits due to a debt,
“If a creditor other than the federal government tries to garnish your Social Security benefits, inform them that such an action violates Section 207 of the Social Security Act (42 U.S.C. 407). Section 207 bars garnishment of your benefits. It can also be used as a defense if your benefits are incorrectly garnished. Our responsibility for protecting benefits against garnishment, assignments and other legal processes usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of Act as long as they are identifiable as Social Security benefits.”
Therefore, a creditor with a credit card, mortgage, private student loan, or auto loan debt may not garnish your wages. The Dept. of Education may not garnish (called “off-set”) Social Security benefits for a federal student loan. However, there are a number of instances where the federal government can garnish Social Security benefits, including:
- Garnish benefits to enforce child support and /or alimony obligations — Section 459 of the Act;
- The Internal Revenue Service can levy against benefits to collect unpaid Federal taxes — Section 6334(c) of the Internal Revenue Code;
- The Internal Revenue Service can collect taxes due by levying up to 15% of a monthly benefit until the debt is paid;
- The Internal Revenue Service allows beneficiaries to have a portion of their check withheld to satisfy a current year Federal income tax liability — Section 3402 (P) of the Internal Revenue Code; and
- Other Federal agencies can collect money from benefits to pay a non-tax debt owed to that Agency — Debt Collection Act of 1996 (Public Law 104-134).
- Under the Mandatory Victim Restitution Act, certain civil penalties provide the right to garnish benefits under 18 USC 3613.
The Social Security Administration Web page Garnishing Social Security benefits contains the exceptions I just mentioned.
Social Security Garnishment
Accordingly, your income is protected if your primary sources of income are Social Security and retirement. Most people who are in the type of situation you are concerned with choose to keep separate bank accounts for their "exempt" funds and any other money they may receive which is not exempt from garnishment; commingling exempt fund with non-exempt funds can lead to all of the funds becoming non-exempt, resulting in a bank levy on what the consumer thought was exempt money.
I strongly encourage you to consult with an attorney licensed in your state about your vulnerability to creditor execution in case of any judgment entered against you. An attorney should be able to better explain the risks of having outstanding debts and help formulate an asset protection plan suited to your individual circumstances.
For more information about the various options available to consumers who are struggling with debts, I encourage you to visit the Debt Help section at Bills.com.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Hollywood, FL | July 19, 2011
July 19, 2011
Regarding federal student loans, Social Security benefits are off-limits for garnishment, which is called an "off-set" when conducted by a branch of the US government, by the Dept. of Education.
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