Federal Government Garnishment of Social Security Disability Benefits
Federal law allows for garnishment of Social Security benefits under very limited circumstances and only for debt recovery efforts by the Federal government. Generally, only overpaid Federal benefits, past-due student loans, outstanding or ongoing child or spousal support obligations, back IRS taxes and similar federal debts may be the basis for garnishment of Social Security benefits.
For child or spousal support garnishment orders, the Social Security system limits the garnishment amount to the lesser of the State maximum or the maximum under the Consumer Credit Protection Act (CCPA) (15 U.S.C. 1673(b)), based on the law of the State where the beneficiary resides. The CCPA limits garnishment to: -50%, if the beneficiary is supporting a spouse and/or child other than the spouse and/or child whose support has been ordered. – 60%, if the beneficiary is not supporting another spouse and/or child. – 55% or 65% respectively, if the garnishment order or other evidence submitted indicates the original support ordered is 12 or more weeks in arrears.
NOTE: SSI (Supplemental Security Income) payments are not subject to garnishment.
For other garnishment sources, the Federal government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And, it cannot take more than 15% of your total benefit. For example, if Doug receives monthly federal benefits in the amount of $900, the government may take either $150 (the amount of Doug’s $900 benefit that is over $750) or $135 (15% of Doug’s total benefit of $900), whichever is less. So, in this case, the government can take only $135 each month.
Effective May 1, 2011, a new Federal regulation requires that banks which receive a garnishment order for an account into which Social Security, VA, Railroad Retirement, or Federal pensions have been deposited, must look more closely before honoring the garnishment order. The bank has to figure out the sum of such Federal benefit payments that have been deposited to your account during a two month period, and must ensure that the account holder has access to an amount equal to that sum or to the current balance of the account, whichever is lower. Under this regulation, you do not forfeit your protection from garnishment by mingling your Federal checks with other money — but there are limits on the amount of money in your account that’s protected from garnishment. If a creditor other than the federal government tries to garnish your Social Security benefits, inform them that such an action violates Section 207 of the Social Security Act (42 U.S.C. 407). Section 207 bars garnishment of your benefits by anyone other than the Federal government. It can also be used as a defense if your benefits are incorrectly garnished.
As for the garnishment of your Social Security Disability benefits, these payments are what is known as “exempt” funds. This means that they cannot be garnished by a creditors. There was a time that a creditor could freeze bank account in an attempt to get such money. If you did not object within a specified timeframe then the money would in fact be paid over by your bank even though the money was exempt. But this is no longer the case. Now, if exempt funds are paid into an account via direct deposit, they cannot be frozen in your account (although other non-exempt money can be). So as long as you have direct deposit (that means that you do not deposit a check), your creditor cannot garnish your disability payments.
Note: Only 2 months worth of benefits are protected. Additionally, don’t transfer benefits to another account or else the protection may be void.
The Social Security Administration responsibility for protecting benefits against garnishment, assignments and other legal processes usually ends when the beneficiary is paid. Now however, once paid, benefits continue to be protected under section 207 of the Act as long as they are identifiable as Social Security benefits. However, the creditor may go after your bank account or other assets. You may lose the federal Social Security protection if you co-mingle your Social Security Disability benefits money with other monies. Check with an attorney in your state.
Also, please note that as far as mortgage debt goes, if your mortgage is via a VA loan then The Debt Collection Improvement Act of 1996 also gives the VA authority to garnish the Social Security benefits of people who owe the VA money. This means that the VA can take your Social Security benefits until the amount you owe has been fully repaid.
The attorneys of Cascadia Disability Law help people just like YOU! We fight to get you the benefits you deserve at the earliest stage possible in the claim process. Call or email us anytime – 503-891-8376 / 800-891-0867, <a href=”mailto:Help@CascadiaDisabilityLaw.com”>Help@CascadiaDisabilityLaw.com</a> <strong>–> Contact us BEFORE you apply, and apply right the first time!</strong>