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Can Debt Collectors Garnish Disability Benefits?
by
JG Wentworth
•
January 31, 2025
•
5 min
For millions of Americans who rely on disability benefits as their primary source of income, the threat of wage garnishment by debt collectors can be particularly concerning. Let’s explore your rights and protections regarding the potential garnishment of disability benefits, as well as important steps you can take to protect your income.
Federal protection of disability benefits
Federal law provides strong protections for disability benefits against garnishment by most private creditors. The Social Security Act specifically prohibits most creditors from garnishing:
- Social Security Disability Insurance (SSDI) benefits
- Supplemental Security Income (SSI) benefits
- Veterans disability benefits
- Civil Service disability benefits
- Railroad Retirement benefits
These protections apply whether the benefits are received by direct deposit or paper check. The law recognizes that these benefits are intended to provide basic support for people with disabilities and should be protected from most collection efforts.
Exceptions to garnishment protection
While disability benefits are generally protected from private creditors, there are some important exceptions where garnishment may be permitted:
Federal debts
The federal government can garnish up to 15% of your disability benefits for:
- Federal taxes
- Federal student loans
- Other federal debts
Child support and alimony
Up to 65% of your disability benefits can be garnished for:
- Court-ordered child support
- Alimony payments
Crime victim restitution
If you’ve been ordered to pay restitution to victims of a crime you committed, your disability benefits may be subject to garnishment.
Bank account protections
Even when disability benefits are deposited into a bank account, they retain their protected status. The bank must:
- Identify federal benefits through an automated system.
- Protect 2 months’ worth of benefits from garnishment.
- Give you access to these protected funds even if the account is frozen.
However, it’s important to note that once disability benefits are mixed with other funds or used to purchase other assets, they may lose their protected status.
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Steps to protect your benefits
To ensure your disability benefits remain protected:- Use a dedicated account for disability benefits. Keep your benefits separate from other income sources to maintain clear documentation of their protected status.
- Maintain proper documentation. Keep records showing the source of your deposits and that they are protected benefits.
- Respond promptly to garnishment notices. If you receive a garnishment notice, immediately notify the creditor and court that your income comes from protected disability benefits.
- Know your bank’s procedures. Understand how your bank handles garnishment orders and what documentation they require to protect your benefits.
What to do if your benefits are wrongfully garnished
If a creditor or bank wrongfully garnishes your disability benefits:- Contact the creditor immediately and provide proof that the funds are protected benefits.
- File an objection with the court that issued the garnishment order.
- Contact the federal agency that provides your benefits:
- Social Security Administration for SSDI/SSI
- Department of Veterans Affairs for VA benefits
- Office of Personnel Management for civil service benefits
- Consider seeking legal assistance from:
- Legal aid organizations
- Disability rights advocacy groups
- Consumer protection attorneys
Dealing with debt collectors
While your disability benefits may be protected from garnishment, debt collectors may still attempt to collect payment. Know your rights under the Fair Debt Collection Practices Act (FDCPA):- Collectors must verify the debt upon request.
- They cannot harass or threaten you.
- They must cease contact if you request it in writing.
- They cannot make false statements about garnishment.
Alternative debt management strategies
If you’re struggling with debt while on disability benefits, consider these alternatives to garnishment:- Negotiate with creditors for reduced payments or settlements.
- Explore nonprofit credit counseling services.
- Consider bankruptcy protection if necessary.
- Investigate debt management programs specifically designed for people with disabilities.
The bottom line
While disability benefits are generally protected from garnishment by private creditors, understanding the exceptions and taking proactive steps to protect your benefits is crucial. If you’re facing garnishment threats or debt collection issues, don’t hesitate to seek legal assistance to ensure your rights are protected. Remember that this information is general guidance and may not apply to every situation. Laws can vary by state and individual circumstances. For specific advice about your situation, consult with a qualified legal professional who can evaluate your particular case.There’s always JG Wentworth…
If you have $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
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* 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 CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT 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.
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.