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Can A Creditor Take My Social Security?

March 12, 2012

Many retired Americans live on fixed incomes. If you are in this group, you know there is little room in your budget to pay an unsecured creditor like a medical bill or credit card. Unfortunately, no matter how carefully you budget, a large unexpected expense can wreck your personal finances.

Fortunately, the federal law does not allow the typical unsecured creditor to garnish from your Social Security benefits. Federal banking regulations also require your bank to take precautions to ensure that Social Security funds are not taken from you. When the bank receives a garnishment order, it must review your account to determine if Social Security payments have been directly deposited. The bank must protect two months of directly deposited federal benefits. For example, if your Social Security direct deposit is $2,000 each month, the bank will protect $4,000 from garnishment. Anything more than the $4,000 can be seized.

If you owe the federal government, your Social Security may be intercepted for an offset. For instance, if you owe federal taxes, the IRS can garnish from your SSA check. Federal regulations allow the IRS to take either 15% of your check, or everything above a minimum exemption (which depends upon your withholding status). Any federal tax refund check will also be intercepted to pay your federal debt.

The federal bankruptcy law can protect you from creditor harassment, wage garnishment, and bank seizure. Once you hire a bankruptcy attorney, third party collectors can no longer contact you directly. This includes collection agencies and attorneys. Once you file bankruptcy, the federal law stops all collection action, and can even stop the federal government from taking your Social Security check.

If you are receiving Social Security and need bankruptcy protection, speak with an experienced attorney to learn how the federal law can help you. In most cases you can discharge your debt, protect your SSA check and regain your peace of mind.

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