Wednesday July 18, 2018
Can a Debt Collector Take My Social Security Benefits?
Can my Social Security benefits be garnished if I have outstanding debts? I just turned 62 and would like to start collecting my retirement benefits,
but I want to find this out before I apply.
Whether your Social Security benefits are garnishable depends on who you owe. Banks and other financial creditors, for example, cannot touch your Social
Security checks. But if Uncle Sam is collecting on a debt, some of your benefits are fair game. Here is what you should know.
If you have credit card debts, medical bills, unpaid personal loans or pay day loans, you will be happy to know that your Social Security benefits are safe
from your creditors. Section 207 of the Social Security Act prohibits debt collectors or a bankruptcy court from dipping into your bank account to take
Social Security money for purposes of paying off what you owe.
In addition, Supplemental Security Income (SSI), veterans benefits, federal employee and civil service retirement benefits and benefits administered by the
Railroad Retirement Board Administration cannot be touched either.
Do be aware, however, that creditors can still take legal action against you to recover what you owe. Depending on your state's laws, creditors may be able
to garnish your wages and tap into other allowable assets, if you have any.
If, however, you owe money to Uncle Sam, it is a very different story. The federal government can garnish a portion of your Social Security benefits to
repay several types of debts, including federal income taxes, federal student loans, state-ordered child support and alimony, nontax debt owed to other
federal agencies, defaulted federal home loans and certain civil penalties. Note that, if you receive SSI, those benefits cannot be garnished under any
The amount that can actually be taken depends on the type of debt. In most situations, the government can claim 15% of your benefits to cover your debt, but
under the Debt Collection Improvement Act of 1996, it must leave you at least $750 each month, unless the levy is for federal income taxes. In that case,
the government is not required to leave $750 behind.
The outcome is different if the debt is for child support or alimony payments. Depending on your state laws, the court may be able to take half of your
benefits or more to pay your obligations to your children or ex-spouse.
If you think your Social Security benefits might be claimed to pay overdue government debts, you need to address the problem rather than ignore it. Most
government agencies are happy to work with you, so long as you are willing to work with them.
The government typically sends several letters before it takes action to collect a debt. The final letter will inform you of the intent to levy Social
Security payments and, after that, you typically will have 30 days to contact the agency and work out a payment plan.
To get a handle on your debt problems, consider contacting a financial counseling agency that offers free or low-cost services to help you manage your
financial problems. To locate a credible agency in your area, contact the National Foundation for Credit Counseling by visiting its website or
You should also make sure you are not missing out on any financial assistance programs. The National Council on Aging's website contains a database of more
than 2,500 federal, state and local programs that can help seniors with prescription drug costs, health care, food, utilities and other basic needs. The
site will help you locate programs that you may be eligible for and will show you how to apply.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this
article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends
and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box
5443, Norman, OK 73070.
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