SSI is exempt from garnishment and levy do I have it partially correct or is this just an urban rumour thank you for answering. – vincent
Mr. bovee's answer to lady who's mom is living off social security and being sued by Chase Bank- I was under the impression that with the new credit card reform laws that went into effect in 2009, if a person is sued by a collections agency, bank or creditor law firm and that person for 60 days prior to the judgement when loosing the suit has had nothing in their account but deposits from soc sec or disability, the bank has to legally refuse the freeze order? is this correct, partially correct or urban rumor?
Is SSI exempt from garnishment and or a bank account levy if there is a judgment for a credit card debt?
—vincent
Hi Vincent,
SSI is exempt from garnishment in most instances. The limited exceptions are tax debts (and other federal government debts) and support payments for a spouse or children.
SSI funds that are in a bank account are protected from levy in payment for a court judgment such as an unpaid credit card debt that has been through the courts. Problems arise when there are funds in the bank account that are not related to exempt sources. The levy would be processed by the bank and it will be up to the account holder to prove exemption and/or a portion there of. It is a hassle, and most especially when there are bills set to be paid that there are no longer funds for.
One approach to take is to set up an account for direct deposit where only SSI, SSDI or other exempt income is deposited and place no other funds in that account. If you find yourself in a situation where there is a judgment and your account is vulnerable, speak to the bank and let them know of the concern and that only exempt money is in that account. The bank will be able to see where the direct deposits are from and would be unlikely to freeze funds if presented with a judgment and levy.
Having said all of this, I have seen banks make errors in this exact situation. Reversing their error is not complicated when only exempt funds are in the account.
The exempt status afforded to SSI is not the result of the CARD Act.
FIND US IN THE NEWS
{click logos for articles}
12:17 am
thank you so much for taking the time to answer this question. the reason as to why the question was asked was that Mr. Bovee stated in the answer to the women’s mother who is being sued by Chase that the account would still be frozen and that it would be a hassle to unfreeze the account, especially if the person sued has no other money. My question, probably not clear enough, was that IF you have an account that has NOTHING in it BUT funds from Soc Sec or SSI or SSD, would the bank be legally responsible to refuse the levy or freeze? If I knew that I was being sued, or if I suspected that say I owed Capital One, which according to a lawyer that I spoke to, Capital One will Sue EVERYBODY regardless of their monetary situation, would it be wise to close the bank account and have my SSD funds transferred to a direct deposit ETA card, since they no longer mail paper checks? would it be legal to close lthe account if I knew or suspected that I was getting sued? And…from what I understand, after a person is sued, they get a financial disclosure sheet that they must fill out or face jail for contempt of court – if say I do have my SSD transferred to an ETA card, do I have to disclose this? and will they attempt to freeze the ETA card even though the ONLY funds that are allowed on these cards must come from either soc sec or unemployment? the reason why I asked as to whether this was associated with the credit card act of 2009 is that Liz Pulliam Weston, in one of her articles briefly touched on this subject and mentioned that it was a “new law” that banks are no longer allowed to freeze an account that have JUST deposits from Soc sec, or SSD, even if they are presented with a freeze order. Thank You again!
12:42 am
You may be referring to the question I answered found here: http://getoutofdebt.org/28320/my-mother-is-being-sued-by-chase-all-she-gets-is-social-security-income-helen
It is always a hassle to unfreeze an account. It is simpler if the bank can see no other deposits than from the Social Security Administration.
It would be great if the bank simply did not freeze funds in the first place. That is in fact how it should work when the only funds there are shown to be from exempt sources. Notifying the bank of the pending or current concern will likely be all that is required to prevent the freeze. My concern is that people work at the bank, and people make mistakes.
If you closed the account with pending court action, or even a current judgment, I cannot think where you would run into trouble. Yes, there are debtor examinations where you may need to fill out some paperwork and send back, or even when you could be called into court to provide the same information about assets, income etc. Make all disclosures and always be truthful in your responses. This type of thing is not problematic if on a fixed income.
It is always best to speak with an attorney in your state about legal concerns. If you can locate a low income legal aid office in your state I would encourage you to reach out to them to explain the situation and get answers that will likely set you at ease.