Protected Social Security Benefits Under Law

Your Social Security benefit payments are protected from most creditors.

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Social Security benefits include retirement benefit payments, disability benefit payments and Supplemental Security Income payments. If you owe a defaulted debt, a common tactic the creditor will take is to try to seize your money through a garnishment action. However, the law provides protection of your Social Security benefits from garnishment in many cases.

Commercial Debts

A commercial debt is a private business transaction related debt, such as a credit card account or a car loan. If you default on this type of loan, the creditor can sue you and obtain a judgment against you. One way to collect on this judgment is to legally seize, or garnish, your assets and income. However, Section 207 of the Social Security Act law prohibits such creditors from garnishing your Social Security income.

Government Debts

The protection you have from Section 207 does not apply to debts you owe to the government or certain other court-ordered payments. The federal government can directly seize some of your Social Security payments for debts such as unpaid taxes, defaulted student loans, fraudulently obtained food stamps or unemployment benefits and delinquent court-ordered child or spousal support payments. Another special case is where you have been ordered to pay restitution payments to a victim of a crime you have been convicted of.

Bank Accounts

Although your Social Security income is protected from commercial creditors, that protection becomes murky after your benefits reach your bank account. Banks were freezing bank accounts upon being served a court garnishment order, even if Social Security payment money was in these accounts. A newer law now requires the bank to ascertain and segregate two months' worth of any Social Security monies and make them fully available to the account owner. Any Social Security monies still frozen above the two-month amount can be released after filing proper documents with and obtaining the approval of the court.

Other Provisions

Supplemental Security Income (SSI) payments, which are need-based, are fully protected from all types of debts and creditors. The two months' worth of benefit protection applies only if the funds are in the bank via direct deposit from Social Security. Any money that's been deposited by regular check or that has been redeposited in another bank is not protected. One way to protect all of your benefit funds is to have them deposited into the government sponsored Direct Express debit card account. None of the funds in this type of account are subject to a commercial debt garnishment order.