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Can Social Security be Garnished for Credit Card Debt?
by
JG Wentworth
•
September 20, 2024
•
7 min
Social Security benefits are a crucial source of income for millions of Americans, especially retirees and individuals with disabilities. At the same time, more adults struggle with credit card debt than ever before. According to a recent report from the Federal Reserve Bank of New York, Americans collectively owe a record $1.14 trillion on their credit cards.
This raises an important question: Can creditors garnish Social Security benefits to pay off credit card debt? Let’s explore the protections in place for Social Security recipients and the circumstances under which benefits might be at risk.
Understanding social security and garnishment
Before diving into the specifics of credit card debt, it’s important to understand some key terms and concepts:
- Social Security: A federal program that provides benefits to retirees, disabled individuals, and their dependents or survivors.
- Garnishment: A legal process where a portion of a person’s earnings or assets is withheld to pay a debt.
- Federal benefits: Payments from the government, including Social Security, veterans benefits, and federal employee retirement benefits.
Protection of Social Security benefits
The good news for most Social Security recipients is that federal law provides strong protections against garnishment of these benefits for most types of debt, including credit card debt. This protection is established by Section 207 of the Social Security Act, which states that Social Security benefits are not subject to execution, levy, attachment, garnishment, or other legal process.
Key federal protections include:
Social Security Administration (SSA) Policy: The SSA will not honor garnishment orders for credit card or other consumer debts.
Bank account protection: Federal regulations protect up to two months’ worth of electronic federal benefit deposits in a bank account from garnishment.
Automatic identification: Banks must automatically protect federal benefits from garnishment without the account holder having to take action.
Exceptions to the rule: when Social Security can be garnished
While Social Security benefits are generally protected from garnishment for credit card debt, there are some important exceptions where benefits can be garnished:
Federal debts: The government can garnish Social Security for unpaid federal taxes, student loans, or other federal debts.
Child support and alimony: Up to 65% of Social Security benefits can be garnished for child support or alimony payments.
Court-ordered victim restitution: In some cases, benefits may be garnished to pay court-ordered restitution to victims of crimes.
It’s crucial to note that credit card debt does not fall into any of these exception categories.
The process of attempting to garnish Social Security
While creditors cannot directly garnish Social Security for credit card debt, they may still attempt to collect through other means:
Lawsuit: A creditor might sue you for unpaid credit card debt and obtain a judgment.
Bank account garnishment: With a judgment, a creditor could attempt to garnish your bank account.
Identification of funds: If your account contains Social Security deposits, the bank must identify and protect these funds.
Challenging garnishment: You have the right to challenge any garnishment attempt on protected funds.
Protecting your Social Security benefits
Even though Social Security is protected by law, there are steps you can take to further safeguard your benefits:
Use direct deposit: Electronic deposits are easier to identify and protect than paper checks.
Separate accounts: Consider using a separate account for Social Security deposits to make identification easier.
Know your rights: Familiarize yourself with the protections afforded to Social Security benefits.
Respond to legal notices: If you receive notice of a lawsuit or garnishment attempt, respond promptly and assert your rights.
Seek legal advice: If you’re unsure about your situation, consult with a consumer rights attorney or legal aid organization.
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What to do if your Social Security is wrongly garnished
If your Social Security benefits are incorrectly garnished for credit card debt:
Contact your bank: Inform them that the garnished funds are protected Social Security benefits.
Provide proof: Offer documentation showing the source of the funds as Social Security.
File a claim of exemption: Submit a formal claim with the court that issued the garnishment order.
Seek legal help: Consider contacting a consumer rights attorney or legal aid society for assistance.
Report to SSA: Inform the Social Security Administration about the incorrect garnishment.
The bottom line
In summary, Social Security benefits are generally well-protected from garnishment for credit card debt. Federal law provides strong safeguards to ensure that these crucial benefits remain available for their intended purpose – supporting retirees, disabled individuals, and their families.
However, it’s important to remember that while your Social Security can’t be taken to pay credit card debt, the debt itself remains valid. Creditors may still attempt to collect through other means, and the stress of unpaid debt can be significant.
There’s always JG Wentworth…
If you’re a Social Security recipient struggling with $10,000 or more in unsecured debt, there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- We only get paid when we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side?
SOURCES CITED
Dickler, J., “Credit card debt hits record $1.14 trillion, New York Fed research shows.” CNBC. August 6, 2024.
About the author
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in any other state contacts us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.
