“We need to get immediate payment or we’ll garnish your Social Security benefit!”
The voicemail left for my client couldn’t have been more clear. After his wife died, he was left with thousands of dollars in medical bills. He’d tried to sort it all out, but trying to process his wife’s death and a mountain of medical bills at the same time was overwhelming. He planned to get to it, but for now, he just needed a minute to grieve.
The bill collectors didn’t wait, and it didn’t take long for the nasty calls to come rolling in. His last straw was the voicemail with the threat of taking away his Social Security benefit. I still remember the frustration, fear and anger in his voice when he asked me, “Can Social Security be garnished by debt collectors?”
This was a first for me. Honestly, I had no idea of the answer. I was determined to find out, so I reached out to my friend John Ross, an elder law attorney at Ross & Shoalmire for a qualified answer.
He said, “Social Security Retirement benefits and Social Security Disability benefits can be garnished…but only in very limited circumstances. Unless the creditor is the federal government, or the debt is for alimony or child support, a Social Security benefit can’t be touched.”
This was good news for my client since medical bills certainly didn’t fall into any of those categories. However, it did make me curious enough to dig in and find out more.
The Social Security Administration has this explanation on their website.
What are the laws allowing the garnishment and levy of Social Security benefits?
Section 207 of the Social Security Act (42 U.S.C. 407) protects Social Security benefits from garnishment, levy or other withholdings by the federal government, except:
- To enforce child support and alimony obligations under Section 459 of the Social Security Act (42 U.S.C. 659);
- For certain civil penalties under the Mandatory Victim Restitution Act (18 U.S.C. 3613);
- With a Notice of Levy to collect overdue federal taxes under Section 6334(c) of the Internal Revenue Code;
- Through the Federal Payment Levy Program to collect overdue federal taxes by levying up to 15 percent of each monthly payment until the debt is paid under Section 1024 of the Taxpayer Relief Act of 1997 (Public Law 105-34);
- To withhold and pay another federal agency for a non-tax debt you owe to that agency according to the Debt Collection Improvement Act of 1996 (Public Law 104-134).
Apparently, although federal debts are subject to garnishments, not all federal debts are subject to the same rules on how a benefit can be garnished. This could be noteworthy, so here are the rules:
All Federal Creditors (except the IRS)
If you owe money to any federal agency, and it is 180 days delinquent, that federal agency can garnish up to 15% of your monthly benefit amount. However, the remaining benefit amount must be at least $750 per month. If garnishing 15% leaves you with less than $750 per month, the agency may only garnish the amount that exceeds $750 per month.
For the IRS, the limit is also 15%. One BIG difference is that they can do this regardless of whether that reduces the amount to below $750.00.
For child support and alimony, the amount of the garnishment is limited to the lesser of the amount permitted under:
- state law, or
- the federal Consumer Credit Protection Act (CCPA).
Under the CCPA, garnishment is limited to:
- 50% if you are supporting a spouse or child(ren) that isn’t the person for whom the benefits are being garnished,
- 60% if you are not supporting a spouse or child(ren), or
- 65% if you are in arrears more than 12 weeks.
If your state law has lower numbers, then only the amount allowed by state law may be garnished.
Garnishment vs. Levy
A garnishment is when a creditor collects a portion of your wages. There is another way certain creditors can be repaid, via a levy. A levy is when an eligible creditor collects funds in a bank account. Levies are scary – you wake up one day and your bank account has been emptied.
There is a protection for Social Security benefits in bank accounts, but the process is a little tricky and so it doesn’t always work the way it is supposed to.
Basically the bank is supposed to look at the amount of the regular Social Security deposit, double it, and leave at least that much money in the account. Anything else in the account is fair game.
However, it is common for a bank to completely freeze an account leaving the Social Security recipient to argue with the bank.
Levies can only be assessed by government agencies, not other creditors.
What You Should Do If Your Benefits Are Garnished
What type of attorney should one consult if they receive a notice of garnishment from their bank? This would depend on the type of creditor.
For example, if it is a tax debt, then you need a tax attorney. If it is related to alimony or child support, then you should call family law attorney. For all others, an attorney familiar with consumer protection laws and debt collection, such as a bankruptcy attorney, is probably a good place to start.
If a person wants to find out if they owe the federal government any money, they can call the Financial Management Service Call Center at 1-800-304-3107. If someone believes that there is an error, or wishes to make arrangements for payments, the individual should call the agency to which the debt is owed…not the Social Security Administration or bank.
Social Security benefits may be garnished, but only in specific situations and only by certain creditors. Medical bills are not on the list of things for which Social Security benefits can be garnished.