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Who Can Garnish Your Social Security Benefits?

Who Can Garnish Your Social Security Benefits?

Aging brings challenges, and financial concerns can weigh heavily on many seniors. Social Security benefits are a vital lifeline for roughly 66 million Americans, with 80% receiving retirement benefits. 

No one intends to borrow money and not pay it back. However, sometimes circumstances are outside our control, such as illness and rising costs. 

What happens when you go on Social Security and you have debts? Can creditors garnish your Social Security benefits? These questions and more will be answered in this article. We will outline various situations and discuss whether your Social Security benefits can be garnished, and if so, how much will be garnished. 

A note before we dive in: There is a misconception that disability benefits cannot be garnished. That is simply untrue. Both benefits can be garnished equally, as outlined below. 

Maximum Amount That Can Be Garnished

Regardless of how many different types of debts (i.e., back taxes and child support), there are limits to how much can be garnished. The most that creditors can garnish from your social security benefits is 60%. 

Can Creditors Garnish Social Security Benefits? 

It depends on what kind of creditor. Below, we will outline various types of debt and whether your social security benefits can be garnished. If they can, we will also outline any limitations. 

Can My Social Security Benefits Be Garnished To Repay Debts Like Credit Card Debt?

can creditors garnish social security - a wallet with credit cards

Social security benefits are a federally protected source of income and are shielded from garnishment to settle debts such as credit card dues, auto loans, or medical bills. These specific types of creditors cannot garnish your social security benefits directly. 

However, it’s important to note that while these benefits enjoy protection, creditors can still seek alternative means to collect outstanding debts. They may pursue a court order to garnish your work paycheck or target other bank accounts where your social security benefits are deposited.

Can My Social Security Benefits Be Garnished To Pay Back Taxes? 

If you find yourself under the weight of a state, federal, or local tax lien, the impact on your social security benefits can be significant. In such cases, these benefits can be subject to garnishment, up to a maximum of 15% per month. 

If You Owe Child Support or Alimony

Your benefits can be garnished under the federal Consumer Credit Protection Act (CCPA) up to 60%. An extra 5% may apply if you’re 12 or more weeks delinquent on child support.

If you owe support for multiple children under multiple withholding orders, the amount that each child receives will be proportional to that maximum. Essentially, the total garnishment won’t exceed the limit, but it will be distributed among the children according to their respective support orders. This process ensures a fair allocation of support while following the maximum limit for garnishment.

Most states follow the CCPA when it comes to child and spousal support, but some have their own regulations. Where there is a conflict, the lower amount typically takes precedence.

If You Have a Defaulted Federal Student Loan

a graduation cap over a stack of money

If you have a defaulted federal student loan, they can garnish your social security benefits to repay your loan. 

Note that it must be a defaulted student loan. If you are currently not in default, it would be wise to remain that way. You can negotiate payments with your creditor and not have your benefits garnished.  It also only applies to federal student loans, not loans to private institutions. 

The most that can be garnished to repay a defaulted federal student loan is 15% of your benefits. However, a creditor is not entitled to the first $750 of your monthly benefits

For example, suppose that you receive $875 in social security benefits. Garnishing 15% ($131.25) would leave you with $743.75, less than $750. Therefore, the maximum amount that could be withheld would be $125. 

Protecting Two Months Worth of Benefits

When a court order directs your bank to garnish funds from your account, the bank will look at your account history for any direct deposits of federal benefits made in the last two months. 

Any federal benefits deposited by direct deposit for the two months before your garnishment order are protected. 

For instance, you receive $1,700 in Social Security each month. Your bank records show $3,400 in direct deposits over the last two months. That amount remains accessible for you to use and cannot be garnished. 

However, if you receive your benefits by check and deposit it into your bank account, that amount is not protected. In such cases, the bank might freeze your entire account balance. You may need to take legal steps to prevent this, showing that federal benefits protected the funds. 

Preparing for Retirement with The Medicare Family

Understanding the complexities of Social Security benefits and potential garnishment scenarios is essential. You can make informed decisions and ensure your financial security by clearly understanding which debts can impact benefits.
At The Medicare Family, we are dedicated to providing reliable guidance and support to seniors navigating the intricate realms of Social Security, retirement, and financial well-being. Schedule an appointment with our team today to discuss your benefits.

Sylvia Gordon, aka Medicare Mama®, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family and has served on the advisory boards of major insurance companies like UnitedHealthcare®, Cigna, and Anthem. In her free time, she can be found taking care of her animals (dogs, goats, peacocks, chickens), and reading a good book. Learn More.
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