Can Creditors Take My Social Security?

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As a general rule, creditors cannot take (“seize”) Social Security benefits, even if they have sued you and obtained a judgment against you in court. There are, however, some limited exceptions to this rule for certain kinds of debts owed to the government, which are explained below.

Are Social Security benefits protected by law?
Yes. With the exception of certain federal agencies, creditors cannot garnish or seize Social Security benefits, whether it is retirement, disability, survivor’s benefits, or SSI. Congress has written this protection into law. This means that ordinary creditors such as credit card companies, medical collectors, and loan companies, cannot take Social Security benefits if it is clear that the money that the creditors intend to take is in fact Social Security income.

Does it matter if the creditor has sued me in court?
No. These protections apply, even if the creditor has a court judgment against you. The court may not order you to pay the judgment out of Social Security money. Therefore, if you are sued on a debt, it is very important that you not enter into agreed orders or agreed judgments where you agree to use your Social Security to pay a debt.

Do these protections exist if the Social Security money is deposited into a bank account?
Yes. Even after Social Security funds are deposited into a bank, they are still protected from garnishment or seizure. Note, however, that the Court must be able to clearly identify which funds are exempt and non-exempt funds. If the Court cannot determine from your records and bank statements which money is Social Security income, then the Court will most likely determine that none of the money is exempt. If income from the Social Security Administration is direct deposited to a bank account, the statement will show a deposit atapproximately the same time each month from the U.S. Treasury. To make clear that the only money in the account is from the Social Security Administration, it is suggested that the direct deposit from the U.S. Treasury be the only deposit listed on the bank statement each month. This will make it very clear to creditors and to a Court that the money in your bank account is protected income.

What if a collection agency threatens to take my Social Security?
The collection agency may be violating the Fair Debt Collection Practices Act (a federal law that regulates collection agencies) by making untrue statements. These statements would be untrue only if the creditor or collection agency knows that your only income is from Social Security. You may have legal claims against the collection agency, and should seek legal advice.

Can government agencies take my Social Security benefits?
Yes, but only under limited circumstances.

First, SSI (Supplemental Security Income) cannot be taken at all, unless the Social Security Administration is trying to correct incorrect past payments.

Only federal agencies may try to take Social Security benefits. Examples of some things the federal agencies can try to take your Social Security benefits for are:

  • Federally subsidized student loans.
  • Other loans owed to, or subsidized by the government.
  • Food stamp overpayments.

Can the federal agency take my whole Social Security payment?
No. A government agency can take only a limited portion of the monthly Social Security check. The first $750 per month, or $9000 per year, cannot be taken. So if your benefits are less than $750 per month, your benefits cannot be taken.

If your benefits are more than $750 per month, the government agency can take the lesser of:

  1. The amount of the debt;
  2. 15% of your monthly payment; OR
  3. The amount by which your monthly payment is more than $750.

Can I protest the government’s action?
Yes. You have the right to get advance, written notices that the government is going to “offset” (take a portion of) your Social Security benefits. You have the right to a hearing if you don’t think you owe the money. You may wish to seek legal advice. Another alternative is to set up payment arrangements with the government agency that is threatening to take your Social Security benefits.

Can I get rid of the government debt in bankruptcy?
In many cases, yes. There are, however, important exceptions, including:

  • Student loans which are generally non-dischargeable and income taxes which can be discharged only in limited circumstances.
  • No debt will be discharged if the person or agency to whom you owe the money proves you obtained the debt by false pretenses or fraud.

An attorney can review your financial circumstances, and the nature of the debts, to help you decide whether bankruptcy is right for you.



Reviewed August 2009