Debt Repayment Plans & Social Security Income

Creditors cannot force you to use Social Security to pay debts.

Social Security income is available to individuals who have either reached retirement age or are disabled. You may opt to enter into a debt repayment plan using your Social Security income, but are rarely legally obligated to do so.

Significance

Social Security provides a limited benefit to individuals who qualify based on the amount of money they contributed to Social Security in the past. If your Social Security benefits are your sole source of income, a debt repayment plan may prove difficult.

Fact

Although you may be legally obligated to repay your debts, a creditor cannot use a lawsuit to garnish your Social Security payments or remove them from your bank account via a bank levy unless the creditor is the federal government.

Benefits

Creditors will often offer very reasonable repayment plans to individuals who are living on Social Security due to the limited amount of income the debtor receives.

Misconceptions

If you are unable to meet the terms of a debt repayment plan using your Social Security benefits before you pass away, your creditors will discharge the debts. Your family members are not legally responsible for making payments in accordance with your repayment plan.

Warning

Creditors who cannot collect from you through a debt repayment plan, wage garnishment or bank levy may attempt to use a court judgment to place a lien on any property that you own.

References

• AFL-CIO: What Is Social Security?
• The Social Security and Disability Resource Center: Can Creditors Garnish My Social Security Check?
• The New York Times: You're Dead? That Won't Stop the Debt Collector

Resources

• United States Department of Labor: Title III Consumer Credit Protection Act