What Can Be Done If a Creditor Garnishes Social Security Benefits?
If a creditor has received a judgment against you for unpaid debt, your first concern will be if your income can be garnished. Social Security checks are often the only income received by elderly Americans. Federal law strictly prohibits garnishment of Social Security benefits by a judgment creditor. However, your benefits can still be inadvertently garnished. You have ways to protect yourself against this situation.
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Who is Your "Creditor?"
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For many people, the term "creditor" is confusing. However, in the context of garnishment, "creditor" refers to someone who has received a civil judgment against you in a court of law after proving that a debt is legitimately owed. This will be a private lendor who sues you for nonpayment for goods or services. For example, a credit card company can get a judgment against you for an unpaid debt. Some states permit hospitals and health care providers to sue you for nonpayment of services. But they cannot garnish your Social Security benefits--ever.
While many states prohibit wage garnishment, creditors and lendors can still indiscriminately garnish your bank account to collect unpaid debt. If your Social Security check is deposited directly into your banking account, that portion of your money cannot be garnished by a creditor. Problems arise when a creditor gets a judgment against an individual and garnishes a bank account that is co-mingled (contains Social Security and other monies, such as your spouse's paycheck, if he or she is still working). Alternately, because creditors can receive default judgments if you don't show up for your day in court, a bank account garnishment can come as a big surprise if you ignore the suit. Many people don't find out that their assets are "frozen" until they attempt to use their debit card or a check they writes bounces.
What Do You Do?
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If your Social Security benefits have been garnished, they will have been taken out of your bank account by a creditor. Once a court issues an order for your account to be garnished, your bank must comply. You will receive a copy of the order, which directs you to inform the court if the account subject to garnishment contains Social Security benefits. However, individuals often receive word of garnishment after an order takes effect, and their assets are already frozen. If this is your situation, contact the court immediately, then contact your bank and the creditor. If you did not receive a copy of the order, your bank should supply you with a copy. If your account contains nothing but your Social Security benefits, ask your bank to remove the freeze as soon as it is permitted by law.
If your account contains co-mingled monies, it's a better idea to first contact the Social Security Administration and have your checks mailed to you rather than deposited electronically. You may have to create another bank account to deposit your Social Security checks, or you can also cash your checks and pay for your bills through money orders. If you cannot find a resolution to creditor garnishment, contact an attorney who can help you.
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Who Can Legally Garnish Your Social Security Benefits?
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While private creditors cannot claim a stake in your Social Security benefits, governmental entities can garnish them. For example, the Secretary of the Treasury can garnish benefits to collect delinquent federal income taxes or to enforce alimony and child support payments. Additionally, Social Security checks can be directly garnished if you have defaulted on a Veterans Administration mortgage, federal student loans, and federal small business and disaster loans.
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