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Can a debt collector take my Social Security or VA benefits?

No. Most debt collectors can’t take your Social Security or VA benefits directly out of your bank account.

When a collector sues you for the debt and wins a judgment, it can ask your bank or credit union to turn over money from your account. This is called a garnishment. Banks must automatically protect Social Security and VA benefits from garnishment if they are direct deposited into your account. (There are some exceptions to this rule, which are explained below.) Here’s how the automatic protection works.

Your bank protects 2 months’ worth of benefits

If a collector tries to garnish money in your account, your bank must look at your account history to see if you received any Social Security or VA benefits by direct deposit in the last 2 months. The bank must protect 2 months’ worth of benefits from garnishment and let you use that money. If your account has more than 2 months’ worth of benefits, your bank can freeze the extra money. 

Example

If you receive $1,000 in Social Security each month, your bank will see that $2,000 in Social Security was direct deposited in the last 2 months. The bank must allow you to use up to $2,000 in the account.

If you receive $1,000 in Social Security benefits by direct deposit each month, and you have $3,000 in your account, the bank can freeze $1,000 of the $3,000. The bank must give you access to the remaining $2,000 so you can continue to pay bills and withdraw cash as usual.

If the bank freezes your money

If your bank freezes any money in your account, it must send you a notice of garnishment. Then, a judge decides whether your money should be turned over to the debt collector based on factors such as the source of your income and state law.

It is very important for the judge to know that your money comes from Social Security or VA benefits before the judge decides whether your money should be turned over to the debt collector. You can seek help from a lawyer. If you can’t afford a lawyer, you may be eligible for free legal help.

Benefits on a prepaid card

Many people receive Social Security or VA benefits on a prepaid card. If your benefits are loaded onto a Direct Express card or to another prepaid account, they are still automatically protected from garnishment just like money in a bank account.

Exceptions 

Social Security and Social Security Disability Insurance (SSDI) can be garnished to pay government debts such as back taxes or federal student loans, and debts for child or spousal support.  Some other benefits, such as Supplemental Security Income (SSI), are protected from garnishment – even to pay a government debt or child or spousal support.

Automatic protections don’t apply to paper checks.

If you receive Social Security or VA benefits by check and then deposit the check into your bank account, the bank does not have to protect 2 months’ worth of benefits in the account automatically. This means that your entire account balance could be frozen and you’ll need to go to court to prove that it comes from protected federal benefits and should not be garnished.

You can protect your benefits by having them direct deposited to a bank account or loaded onto a prepaid card.

To take advantage of the automatic protections for direct deposited Social Security and VA benefits, you can sign up to have these benefits direct deposited to your bank account or loaded onto a prepaid card.

Consider finding legal help in your state:
You may qualify for free legal help.

  • The Center for Elder Rights Advocacy can refer you to a local agency that provides free legal help to seniors who qualify. You can call the Center for Elder Rights Advocacy at: (866) 949-2372 or visit: Legalhotlines.org.
  • You can also find your local legal services program or attorney referral program here. 
 Tips:
  1. You can use our sample letter to tell a collector that your Social Security or VA benefits are protected from garnishment. Check out the sample letter here.
  2. Consider talking with a lawyer in your state about other state and federal laws that may help protect your money and other assets from garnishment.

Federal and state laws may protect the money you receive from other sources from garnishment. This may include money you receive from a pension or retirement plan, federal student loans, child support or spousal support payments. Other laws in your state may protect some of your money and assets, too. To learn more about how they may be protected, consider finding legal help

  1. Know when your bank can and can’t charge you fees for garnishment. Your bank can only charge you a fee for processing the garnishment if you have more than 2 months’ worth of direct deposited Social Security or VA benefits in your account. To learn more, click here

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