Can a Bill Collector Garnish Disability Benefits?

by Sep 26, 2017

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Except in rare cases, bill collectors cannot garnish your disability benefits.

Which Disability Benefits Are Subject to Garnishment?

Disability income comes from two primary sources: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

SSDI protects you if you become disabled during your working years. Part of the Social Security taxes you pay on your income go toward this program. Because SSDI is a type of government insurance and not a welfare program to help the needy, you cannot receive benefits unless you have a sufficient work history and have paid into the system. SSI is a public welfare benefit and you may qualify even if you do not have a sufficient work history.

Bill collectors may not garnish your income from SSI under any circumstances, but they can garnish your SSDI benefits in rare cases:

Back Taxes

The IRS garnishes certain Social Security benefits through its Federal Payment Levy Program (FPLP). Under the FPLP, the IRS may take 15 percent of Social Security benefits. But beginning in October 2015, the IRS no longer includes SSDI benefits in the FPLP.

Student Loans

Your SSDI benefits may be subject to garnishment for unpaid federal student loans. Even if it has been decades since you were in school, the government can take part of your SSDI benefits to satisfy unpaid student loan payments. However, your first $750 in benefits is protected from garnishment for non-tax debt.

Child Support

You can have your SSDI benefits garnished for back or current child support payments.

Can a Creditor Garnish Disability Funds in My Bank Account?

In addition to garnishing your wages, creditors can sometimes levy funds from your bank account to satisfy debts. To garnish funds from your bank account, a creditor needs a court order. The creditor presents it to the bank, which grants access to your account to retrieve funds. However, the creditor should not touch funds from Social Security disability benefits.

As you can imagine, complications frequently arise. Because your bank account likely contains funds from disability income and other sources, a chance exists that a creditor might garnish funds that came from SSDI or SSI.

The federal government passed new laws in 2011 to prevent this scenario. In response to the new laws, banks must earmark funds from SSDI or SSI as off-limits to creditors.

One way to protect your SSDI or SSI benefits is to ensure the SSA electronically deposits the funds into your account. This makes it easier for the bank to protect these funds from garnishment.

Social Security Disability Help From the Disability Advantage Group

Need help getting the Social Security disability benefits you deserve? Call 866-615-5465 to speak with a qualified lawyer who can help.