Can a Creditor Take My Social Security Benefits?

Bankruptcy, Bankruptcy Advice0 comments

For millions of Americans, the retirement landscape is not what it was in their parents’ generation. Every day, older Americans are forced into early retirement, aged out of the workforce, or let go after being replaced by a twenty-something employee who will gladly work the same job at half the pay.

Today’s workers do not have the same opportunities for retirement as earlier generations. Many companies are no longer offering retirement packages, and millions of Baby Boomers are finding themselves with little to no retirement savings.

With insufficient funds to cover their living expenses at 65 and beyond, countless older workers are having to move in with their adult children, start all over in lower-paying jobs, or try to go out and start their own businesses.

Are a senior who is having financial problems?

What about you? Are you one of those people who are on Social Security but do not have enough funds to pay all of your bills? Social Security is not a lot, but it’s a vital financial resource for Americans in their 70s, 80s and beyond.

If you are having a hard time financially, you may be wondering, “Can a creditor take my Social Security benefits?” This is a very good question indeed.

Let’s say that a creditor sues you for a debt you owe and they win in court and get a judgement. Can the creditor ask your bank or credit union to hand over the money that you owe?

According to the Consumer Financial Protection Bureau, a government agency that protects consumers, banks are required to protect Social Security benefits from garnishments so long as they are directly deposited into the debtor’s account. However, there are exceptions to this rule.

Your Bank Automatically Protects 2 Months of Benefits

If a creditor obtained a judgement and they try to garnish money from your bank account, your bank is required by law to review your account history and check if you received Social Security benefits by direct deposit in the previous two months.

Under the law, your bank must protect two months’ worth of Social Security benefits, but any amount beyond that is subject to the garnishment, according to the CFPB.

If your bank decides to freeze the excess money, the bank has to send a notice to you about the garnishment. From that point, a judge will decide whether the frozen funds should be handed over to the creditor based on state law and the source of the funds.

Note: It’s critical that the judge knows that the funds are from Social Security benefits before he or she decides to turn them over to a creditor.

Exceptions: A debtor’s Social Security benefits can be garnished to pay certain debts, such as federal student loan debt, child support, spousal support, and back taxes.

If your Social Security benefits are at risk of being garnished for a government debt, child or spousal support, or a debt to a private creditor, contact Dethlefs, Pykosh & Murphy Law to find out how bankruptcy might be able to protect you from all sorts of garnishments, including those levied against your personal bank accounts.

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