Can Debt Collectors Take Your Disability Benefits?

Close to half of all Americans have more credit card debt than savings. According to CBS News, the overall personal savings rate in the United States fell even as Americans increased spending. This has resulted in a situation where a lot of people don’t have cash on hand to pay their debts.

If you become disabled, your debt problems could become much worse. After all, if you are sick and unable to work, you will not have income to pay your bills. You may also incur additional medical expenses and costs that make your debt rise. This is especially true if it takes a long time to get Social Security Disability (SSD) benefits approved. For many, this process can take months, even with the help of a Boston disability lawyer, because the SSA works slowly and because many initial claims are denied.

If you have been waiting for benefits and are behind on your payments, debt collectors may start to pursue aggressive collection activities. When you begin getting SSD benefits, the income may not be enough for you to repay your debt and still live. As a result, you may be concerned about whether your SSD money can be garnished by debt collectors if you do not pay. The answer, in most cases, is that they cannot garnish your disability benefits.

Garnishing Disability Income for Debt Repayment

Benefits from both Social Security Disability Income (SSDI) and Supplemental Security Income (SSI) are protected from garnishment. This means even if creditors pursue legal action against you and go to court, they are not going to be able to take disability benefits that you have coming in when you cannot work.

There are, however, some exceptions to this general rule. For example, the federal government is able to garnish Social Security Disability Income in order to recover money that you owe the government. This debt could come from back taxes that you haven’t paid, or if you defaulted on student loans that the federal government had guaranteed.

If you have back child support benefits that you owe, the money may be garnished to pay these debts back as well. However, garnishment of SSD benefits is possible only for people receiving SSDI. When you receive SSI, the money that you get cannot be garnished by anyone, even the federal government and even if you owe child support.

In 2011, the federal government also passed a law that imposed tougher restrictions on creditors to prevent them from taking Social Security funds that had been deposited. Banks, in the past, were permitted to comply with orders for garnishment without checking where the income came from. Now, banks need to review accounts to see if Social Security funds have been deposited. If so, the money from SSD income cannot be taken to satisfy the garnishment order. The new law provides protection so that the sick and injured who need disability benefits do not have the money the need taken from them by creditors.

Call our Boston SSDI attorneys for a free and confidential appointment at (617) 777-7777.

More Blog Entries:
Disability Awareness Efforts a Reminder of Importance of Providing for Disabled, Feb. 20, 2014, Boston SSDI, Attorney Blog