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Can a creditor garnish my Social Security benefits to pay a debt?

If a creditor sues to collect a debt you owe and wins a court judgment against you, the creditor can ask the court for an order to garnish your salary, bank account, or other assets. The court order would instruct your bank to turn over money from your account. However, federal law says that many federal benefit payments like Social Security benefits, Supplemental Security Income (SSI) benefits, Veteran’s (VA) benefits, Railroad Retirement benefits, and benefits from the Office of Personnel Management are not subject to garnishment in most cases - which means that this money is exempt. (For some benefits, there are exceptions for money owed in child support, spousal support, or for federal taxes.)

Under a federal rule that became effective in May 2011, your bank is required automatically to protect up to two months of these benefits that are directly deposited into your account.

In the past, when a creditor asked a bank to garnish an account, the bank would generally freeze the account while the parties sorted out whether the money was exempt.

Now, if the bank receives a garnishment order against an account holder, the bank must review all accounts owned by the person to see whether any of the exempt federal benefits were electronically deposited during the preceding two months. If yes, the bank must calculate the protected amount. That amount equals all benefit amounts direct deposited in the account in the two-month period or the balance in the account, whichever is less. The bank must notify you that this amount is protected.

In some cases, your federal benefits are not automatically protected, including if:

  • You receive your federal benefits by check rather than direct deposit
  • Your federal benefits were deposited more than two months before the bank received the garnishment order
  • You transferred the money from the account that received the federal benefits to another account

If any of these situations apply to you, your money still may be exempt from garnishment, but you will have to tell the court or your creditor that you think money in your bank account is exempt.

Some states provide greater protection than the federal law for benefits payments that are in your bank account. This means that, in some states, the amount your bank will automatically protect from garnishment is higher than under the federal rule.

Another way to protect greater amounts of exempt federal benefits from garnishment is to use the Direct Express card. Direct Express is a prepaid debit card on which federal payments, including Social Security, SSI, and VA benefits, can be deposited. Benefits paid this way cannot be frozen or garnished unless they fit the exceptions under federal law – for example, if you owe child support or alimony.

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