The bank account of a person is the first thing that creditors will be looking to seize when they have a judgment against them. However, if those funds came from SSI or Social Security benefits, there are limitations on what the creditor can do with it. As a bankruptcy law firm, we often hear questions like: Can SSI be garnished? The answer to that is that it simply depends. Generally, no, it cannot. However, there are a few instances where the government may garnish money from your SSI and Social Security benefits.
At O’Bryan Law Offices, we possess an in-depth knowledge of all areas of financial law. This includes topics such as wage garnishment, tax levies, repossession, and more. In this post, we’ll explain if and when SSI might be eligible for garnishment. Reach out to our experienced attorneys today to schedule a consultation and see how we can help protect you from potential SSI garnishment.
What is SSI?
SSI stands for Supplemental Security Income, which is a federal income program administered by Social Security. However, the funding for SSI does nor come from Social Security taxes, but rather general tax revenues. The intention of SSI is to assist elderly, blind, or disabled people who have little to no means of income. It provides these individuals with money so that they can obtain basic needs for survival, such as food, clothing, and shelter.
SSI is different from Social Security benefits in that it is not based on you or a family member’s prior work history. Those insured with Social Security, meaning they worked for a certain amount of time and paid Social Security taxes, receive these benefits. Meanwhile, SSI gears more towards those who have limited resources and meet the specified requirements. Individuals who receive SSI are most likely living on a fixed income and, as mentioned before, are elderly, blind, or disabled.
Can Social Security Be Garnished for Medical Bills?
So often do we hear the question, “can SSI be garnished?” It’s completely understandable that many who are on these benefits fear that if they have an outstanding debt, the creditor will garnish funds from their SSI or Social Security. However, this fear is, for the most part, baseless. This is because federal law prohibits regular creditors from seizing your Social Security and disability benefits.
According to Section 207 of the Social Security Act, regular creditors are not able to garnish or levy any money from Social Security or SSI. “Regular” creditors refers to anyone attempting to collect money for things like credit card debt, personal loans, payday loans, repo debt, and yes, even medical bills. Federal law does not allow these creditors to touch your Social Security benefits to collect debt.
Can My Disability Check be Garnished?
Both Supplemental Security Income and Social Security disability benefits (SSDI) are generally exempt from creditors. We say “generally” because there are a few exceptions when it comes to this law. We’ll get into those later.
Despite these very explicit exceptions, however, some creditors may still attempt to garnish or levy your bank account. If you owe debt, a creditor may get a court order to freeze the money within your bank account. Before 2011, banks were able to comply with these court orders without first checking for the source of income. However, a federal law passed in 2011 that requires banks to review the account information to determine whether the debtor received any SSI or SSDI by way of direct deposit. This means that if your disability check directly deposits into your account and a creditor attempts to freeze your account, your bank must protect those benefits from garnishment.
Though it is illegal for regular creditors to garnish money from your disability checks, it is important you don’t mix your Social Security income with other income received in your name. Creditors may mistakenly seize these funds in your account if you do so because they don’t know where your regular income ends and where your SSI begins. If you do happen to commingle your income, you will need to prove to the court that the money in your account is ineligible for seizure. If you need to defend against any seizure of benefits, your best bet is to use Section 207 of the Social Security Act.
Is My Social Security Protected From All Creditors?
Generally speaking, protections are in place that make Social Security funds restrained from garnishment and other actions taken by debt collectors. However, this is only if the money deposits into your account directly. If you transfer the funds into a different account after receiving them, protection will not be automatic.
A creditor may still have your account frozen, if you have delinquent payments. If they issue a garnishment and you don’t respond to claim your exemptions, the funds may still transfer to the creditor. Even if you claim your disability exemptions, the funds remain inaccessible to you until it goes before a judge. To ensure protection of your Social Security from regular creditors, it’s best to have your disability money directly deposited into your account so the bank can make this distinction for you.
Unfortunately, just because regular creditors cannot touch your benefits doesn’t mean it’s safe from everyone. Your Social Security isn’t entirely invincible. Listed under the same section of the Social Security Act (207), certain creditors are exempt from this law. To no surprise, this includes the federal government.
So, when can SSI be garnished, exactly? The first and perhaps most obvious is for the IRS to collect overdue federal taxes. The Internal Revenue Service (IRS) is the government agency responsible for collecting U.S. tax dollars and enforcing tax laws. This government service can, in fact, access these benefits to cover any back taxes you may owe.
Student loans, child support, and alimony can also get taken from your disability benefits. That is, if you refuse to pay them on your own. A person may bring legal action to enforce their rights to child support and/or alimony. Of which, the result may be garnishment from the money you receive from Social Security.
Contact our Legal Team at O’Bryan Law Offices Today!
O’Bryan Law Offices is Louisville, Kentucky’s top bankruptcy law firm. We combine an in-depth understanding of bankruptcy law and strategy with individualized, compassionate client service. Whether you are filing for bankruptcy or simply have more questions like Can SSI be garnished? we have you covered. If you seek legal financial help of any sort, contact O’Bryan Law Offices today. Fill out our contact form on our website or give us a call at 502-339-0222 to see how we can assist you.