Is my social security and pension exempt from debt collectors garnishing?
I was forcibly retired last year and am paying 8 credit card bills -1 in collection - with an income of ss and pension only. I can't do it anymore. What do i do?
Is my ss and pension exempt?
—elliot
Short answer
Your social security income cannot be garnished at the source, and most pensions are exempt from garnishment too. A collector would first have to sue you and get a judgment entered in court. The risk that is left after that is a bank levy, on the money once it is sitting in your bank account.
Key points on this page
- Social security cannot be garnished at the source. Most pensions are exempt from garnishment as well.
- Nothing can reach your money until a creditor sues you and a judgment is entered in court.
- The remaining exposure is a bank levy, because the funds lose their protection in the eyes of a collector once they are on deposit.
- What a judgment creditor can reach, meaning bank funds, wages, personal property and a car, is set by your state exemption laws. The amount of protection you have may surprise you.
- Before it goes that far, weigh the alternatives: a lower fixed payment through credit counseling if about 2 percent of your combined balances is affordable, settling for less if you can pool roughly half your balances within 36 months, or chapter 7, which can cost under 2,000 dollars and removes the risk of suit, levy, garnishment and liens.
- Some people on a protected fixed income stop paying and accept whatever comes, because their income and property are already exempt. HELPS assists seniors and people receiving disability or VA benefits.
It sounds like you are asking what will happen if you stopped paying on all, or maybe just the account you already have in collections. The quick answer is that your social security income cannot be garnished at the source, and most pensions are exempt from garnishment too. You would first have to be sued, and a judgment entered in court, before there is any risk to your money from a debt collector. And what risk there is, given the sources of the income, would be when that money is on deposit in your bank account, so in the form of a bank levy.
If your situation reaches a point where you have to be concerned about how a debt collector will go about trying to collect on a judgment, you would then look to how much of your stuff (money in bank account, wages, personal property, car) is protected by state law. The amount of protection you have from creditors in your state may surprise you.
What state do you live in?
Bank Account and Wages – Limiting Your Risk from Debt Collectors
Before you react to how much risk you have if a creditor sues you in order to get paid, consider whether that can be avoided. Your not able to pay all 8 credit card debts today, so something has to give.
What if your credit card payment could be lowered, and fixed at a more affordable monthly amount?
Add up all of your credit card bills and then calculate two percent of that. Is that two percent much lower than what you are paying out to all 8 cards today? If it is, you are paying higher interest rates. If those rates are lowered (and fixed), would you be able to pay that amount consistently on your fixed income? If yes, read through the credit counseling section of my debt relief guide.
If roughly 2% of your consolidated credit card balances is out of the question, what about negotiating lower balance payoffs? Your credit card debts can be settle for less than what you owe once they reach a certain level of delinquency. If you are not making monthly payments to your credit cards, and saving up all the money you can instead, how long would it take you to pool together about half of your credit card totals?
If your answer is less than 36 months, settling these credit card bills may be the answer to avoid bankruptcy. Keep in mind that some creditors will accept settlement far lower than 50%. The review post about what major credit card lenders settle for is fairly accurate. Use that as a beginning guide to how much money you will need to settle with your banks.
You can post a list of your different creditors in the comment section below, with the balances as of today, and I can offer feedback about negotiation targets, timing, and prioritizing creditors who are the most likely to sue. Settling with the right creditors early can limit your risk of bank levy and property liens.
Put the Debt Behind You with Chapter 7 Bankruptcy
While bankruptcy is something most people want to avoid at all costs, I usually find they have not assessed the costs and benefits. While we talk about your credit card bills being affordable with credit counseling, or by settling for less above, chapter 7 bankruptcy is typically the ultimate in affordability.
Chapter 7 could cost you less than 2k from start to finish (I have seen costs less than 1k). Using bankruptcy you are able to discharge those credit card debts (and other bills), and once discharged, you remove any and all risk of being sued, or any type of bank levy, garnishment, and property liens.
You have to qualify for chapter 7 bankruptcy using an income means test specific to your state. And just like there are state exemption laws that protect you from debt collectors, there are state exemptions for what you are allowed to keep in a chapter 7 bankruptcy. If your stuff is valued at more than the exemptions in your state, you may look to a chapter 13 bankruptcy where you repay some, or all of the debt, over probably 5 years. But when it comes to people having to consider chapter 13, I have often found debt settlement to be a better alternative.
What if you just didn’t pay, and did nothing?
Some folks with too many bills, and not enough income and assets (such as being on fixed income from disability and social security), will stop making payments all together, and wait for whatever comes. If sued, and a court judgment entered, they already know they are not at risk because; their car and other personal belongings are protected by state law; they are not working in order to be garnished; wages are low enough in their state to be protected; live in a state where wage garnishment is not allowed; and funds like social security that are exempt are the only moneys deposited into their bank account.
Some people may feel that doing nothing is better than filing for bankruptcy, and there are many times I will agree. Check out the above interview I did with Eric Olsen, Executive director for HELPS. Eric and his team are available to help seniors, and those receiving disability and VA benefits, in order to protect themselves from all manner of debt collection:
This was a pretty long winded answer to a short question. My goal with this page is to bring the state exemptions from extra ordinary debt collection into focus. Anyone with questions or concerns about this topic can post in the comment section below. Please include the state you live in.
Need some personalized help?
I do offer a no cost initial consult to anyone trying to get their bearings on what to do about their particular situation. You can schedule the call using the Get Help tab at the top of this page.
I can usually offer actionable feedback in a brief call once I know the details of your situation.
You can post in the comments below anonymously, which I answer daily.
You can post in the comments of any of my YouTube videos.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
With going through the whole disability approval process we have accrued a lot of debt .I estimate 75% are Medical related. Our insurance is a PPO. I Was diligent on checking specialists & hospitals were in our network. Our insurance luckily is a good plan. &. The accepted Amt on the bills these MD S & hospitLs agreed in contract w ins is very generous. Due to several medical issues I have met the deductibles for two years quite early in the calendar year. However we keep receiving bills to collect portion not paid by Insurance. I thought contracted places made agreements prior & patient should. Not be liable for this Amt. Also do these. contracted places receive a set amount for. Participating in the network annually? It seems As though Amt received is more than enough. I was recently hospitalized for 4 days. The Amt Hospital billed for was $58,765 Our Ins paid all but $400 We received a statement Amt accepted however now the Hospital keeps trying to collect $400 R we expected to pay this ? Quite frankly I feel they should be content with large Amt ins paid & call it a day!
I wish it were that simple!
Are you unable to pay the $400?
Can they take money you have on a IRA that you have for retirement?
No, that is typically not an option. But talk with an experienced debt collection defense attorney if you are sued, and get a firm grip on what cannot be touched.
Great Resource here!
I have a few questions.
First my only income is well below the minimum wage (Disability only) The only possible asset I have is equity in my house. The house is held jointly with my wife. As I understand it my disability income is protected as is the house when held in joint?
BTW we are in Missouri
The debt in question is about 2000 in credit card debt currently held be Midland LLC .
Thanks for all the info here!
Mike
I am not sure the house is protected if Midland sues and gets a judgment against you. It could result in a lien filed against the home that would have to be cleared before you could refi or sell.
Live in maryland and soon will be getting a personal injury check for a car accident can credit card debtor’s intercept this check or take it somehow?
If you have a judgment against you already, I would be concerned about non exempt cash in your bank account. Getting the check from you before you cash it would be hard for them to do.
Talk with an experienced debt collection defense attorney in your state, or call the nonprofit firm in the video interview I did above.
I live in south carolina I am on disability 908.00 monthly. I have credit card and personal loans. I own my home .I have a car . I am not behind on anything yet but finding it hard to make payments.Can they take my home . My car is not paid for. Can they take it
No judgment creditor can take a car from you that does not belong to you, and the car is not yours when you are still paying it off.
Your home is at risk of a lien in South Carolina if a judgment is entered in the court. It is mostly automatic there. But that does not mean they come and take your home. You will have to resolve the lien when you sell or refinance.
I live in Arizona and recently has an operation. I am 75 years old and thought my Medicare and Supplement I had would cover it. It didn’t . I got a bill from the Hospital for $1505. I told them it might as well be 15 million. I can’t pay it. Even if I made payments the only amount I could afford I would be dead before I could make a dent in it. They turned it over to a Collection Agency that called me and wanted to know my intentions. I told them what I told the Hospital. I am Living on Social Security and a small pension which is put by Direct Deposit once a month in my Debit Bank Account. My question is can they seize my bank Account, of so would really screw up my life, might even get evicted if I couldn’t pay my rent. I don’t write any checks every bill I have is deducted from my Bank account. Can you let me know what to do? I read somewhere that Social Security and pensions were exempt from seizure. Is that right in Arizona?
What does “Awaiting Moderation” mean?
First time commenters have to have a comment approved before their comments auto post. This will also happen with any comment posted that contains a link. I have to set the site up this way due to all the spam that hits every day.
It likely is true for you in Arizona, but run your scenario by an experienced debt collection defense attorney in Arizona so you can be certain. You can also reach the law firm in that video interview I did above.
I was sent a letter telling me they were going to sue me for oweing them three thousand dollars, and if I didn’t pay they were going to get it from my income tax. Can they do that?
Who sent you the letter? Who did you owe the debt to originally? Was the reference to state or federal tax?
My rent went up $ 200 dollars I can’t pay my credit cards no more I owe $6.000 dollars can they sue me I just don’t have the money
Who is your credit card with? Some are more known to sue than others.
Hello, my name is Joe and I live in Florida. I am 80 years old and am widowed. Have limited income from pension and social security, after i pay my rent and household expenses I have about $165.oo left. I have also medical issues and want to know if i should just stop paying the credit cards and if they can come after me with any kind of garnishments? the credit cards are $630.00 a month which would really help me to live a better life without worry
If it were me I would stop paying on them. You can look at filing chapter 7 bankruptcy, connect with a place like HELPS (interviewed int he video above), or even stop paying and react to collection only if they reach the courts.
Im a single mom receiving child support which will be stopping next year and I have a low income of only 10,000 a year without support since I dont have a career because i chose to be a stay at home mom, no regrets. I have worked and saved and thinking of paying off morgage in next couple years. Im wondering if I need the tax write off of 3,800, I will still have property tax of 4800 yearly to write off. Would I benefit from paying off morgage?
3800 is interest I would be saving by paying off
Yes.
Dear sir I had a brain stroke December 2015 and had to retire December 2016. this past summer I started to receive credit when I applied for a loan thru a private source and the check was canceled after the bank approved it, then causing my checking account to close and charge me for the check I never receive. m credit started to plunge and my medical benefits ran out. I was forced to apply for social security which I qualified for. I can not catch up or get ahead and i need to eliminate all my debt for a fresh start with a better credit score. Please help anyway you can. Thanks
The quickest, and least costly way to eliminate debt, is often going to be chapter 7 bankruptcy. Not good for your credit score, but anything other than paying on time… all the time, is not good for credit.
Check out this article where I cover the primary forms of debt relief and the impact to your credit.
My only income is social security. I live in Albuquerque, NM and I’m not able to pay my bills. I purchased a home in 2001 and I still ow $88 plus on it. If I don’t pay my bills, can they take my home? This is the only property I have.
They have to sue and get a judgment first, and even then it typically just means they file a lien against the home (not take it from you or initiate an involuntary foreclosure).
Sorry, This is Mary Mora Again. I meant to say I owe $88 thousand on my home, Not $88 dollars. What would my situation be then?
Being a home owner with equity makes you a collection target still.
I am 73 years old. I make 1544 in SS. I can no longer afford my financed car. It was financed in TX and I now rent in AZ. I have no assets. What happens if I voluntary want my car repossed. Is my Ss safe?
Your social security is safe from any debt collector trying to collect on what will be a deficiency balance on the repossession (what is left owing on the car loan after they auction your car off and apply what they get to the loan balance).
I have very little and rent. Can they sue me? Car bought in TX and I am now in AZ. If they sue me, what would happen? Thank you.
You could be sued. If they get a judgment, based on what you shared, there is really nothing they could do to force payment.
Thanks!
Michael
Day before yesterday I got a motion to” change venue “from a firm in Wa and I live in Idaho., The firm is Suttell, Hammer and White PC. So I called the office and spoke with a lawyer there , he said he was not licensed in ID , I wanted to know if I am being sued, because it looks like the forms that I get from my neighbors attorney except that the plaintiff is Discovery credit card. The lawyer said yes Im being sued for $5,977.00 and that the court where I live now needs to review change venue motion. Apparently the county that they have me living in I have not lived in 4.5 yrs so they need a judge to sign the motion and I will be served in the county I currently live in! I told him I was told by legal aid that I am judgement proof and am being sued by my neighbor, he is now threatening me with contempt of court because of circumstances beyond my control. I haven’t started paying him anything yet because he still thinks we are blocking the easement with rocks, which we tried to take down last weekend but there was subzero conditions and ice. I have kept the judge apprised of the situation and left voicemails with his lawyer but the lawyer never calls back. In the morning I am sending the note to the judge and lawyer that I had the man that was going to remove the rocks wrote so they don t think Im ignoring the judgement. Now I also have to deal with Discovery bank !The lawyer at Suttell, Hammer and White PC advised me to send a letter to the firm to his attention saying that I am judgement proof. I mailed that off yesterday. I know I still am most likely going to get sued and I also owe Wells Fargo and US Bank money approx 5 grand each,, What should I do now? Thank you
With a home, whether you have decent equity or not, you are not technically what I would consider judgment proof. Just your income sources.
I suspect Discover will still sue. Contact Ryan Ballard about debt collection defense in Idaho if you want to get feedback about fending off the lawsuit until you can settle it. He is in Rexburg, but covers the state on debt collection defense.
If you do nothing, and they get a judgment, it will likely end up with a lien on the home.
Okay thank you
I’m on SSDI, just for a year and a half ago and I am not able to make payments to doctors because I’m not on SSDI medical yet . I have to wait until this September to get it. I have been use to being able to pay all my bills but it’s because I had worked for a Mill for 31 years and made good money.. I bought a new car almost two years ago and I am trying to get through the process of being able to get it refinanced. but I have to wait for a year or so. I’m paying for my medical and I have about 600 I owe because of my deductible. Now I’m getting stuff through the mail that they are going to take action against me. I have never been so scared in my life as I am right now. I owe three credit cards that are threatening to take me to collections and I am trying so hard to find a way to pay them. I have really bad anxiety disorder and I have been crying and depressed about this and I recently moved to a really small town away from my friends and family and all of this is a very scary situation. I get 1401, in disability benefits and 334, in pension fund. The way I was living I was able to pay for my bills easily. But after I had to retire from my spreading arthritis and anxiety disorder it seemed like now I have more bills than before. it’s because I had really good insurance and good pay.. I need to be able to keep my car because I have to travel over the mountains to be able to see my mental illness counselor. I am living in an area where there is no one that is a in network provider and I found that out the hard way because now I owe 600 dollars for a out of network doctor. So I drive three hours away from me to get a Good doctor. I have been through bankruptcy about almost 7 years ago and I don’t know if I can do it again. Do you know if I can? And am I able to keep my car because of my disability? I have been so stressed out about this and I am going through a bad depression. I can’t do this anymore and I really need to get some help. I’m 52 years old and I didn’t want to be disabled and it has been a long grueling time for me. I loved working and my feet are not able to do what I was doing. I need two of my toes cut off from arthritis and I am on six different medications for my anxiety disorder and arthritis. This really sucks! Thank you for your time and consideration for this matter. I hope that you can guide me to do it right and still have my dignity. PEACE.
There is an 8 year wait to file chapter 7 bankruptcy. You can look at filing again in a year.
How late are you on the credit card bills? How long ago were you originally billed the $600 medical?
I am 82 years old. Divorced. Being treated for COPD, Prostate & Bladder Cancer. My sole income is from Social Security and private pension. After all fixed expenses I have $600 monthly to cover food,
clothing, prescriptions, gas etc. I rent a house, have a car payment and owe IRS back taxes.
If I stop paying on 4 unsecured loans (3 credit cards and one signature loan) can a judgement be
levied against my Social Security and Pension? I do not have any savings or other assets.
Your social security is protected, as are most pensions.
I live in Kansas and I will start receiving SSDI starting Jan. 2017. I am being sued for medical bill. Can they take my disability?
Your disability is protected.
My retired mother in Chicago is getting sued for not paying her credit cards. She was forced retire last year and basically has zero savings. Her husband left her and she takes care of her disabled son (my brother) who has cerebral palsy, epilepsy and retardation. She currently lives off her social security and my brothers disability checks. She currently has 2 court summonses in Chicago’s court system. I live in Oklahoma and currently going thru my own financial issues due to a divorce. What can I do to help her?
I would suggest she first talk to an experienced chapter 7 bankruptcy attorney about her options to get a fresh start.
I live in Mi. I’m retired , receiving a Calpers pension from Ca. I also receive social security benifits . I was recently served a summons for unpaid credit card balance .
I fell behind moving to Mi. a year and a half ago . My question is .. Is my social security and Calpers Pension excempt from garnishment living in Mi. ?
Thank you
More than likely, but call in and confirm that with the group in the video above, or reach out to a debt collection defense attorney in Michigan.
The judgment will not be going away, and will grow with interest. What is the amount you are being sued for, and who is the creditor/plaintiff in the suit?
My grandfather has 5 credit cards totaling about $16,000.00 and 4 store cards with $$10,000.00 he gets ss and military retirement. He can no longer afford to pay them due to health care and medication costs. He lives in Louisiana he is 86 years old and owned his own home. The house is assessed at below $20,000.00 he got a message that cominity bank. Saying that he needed to contact him with a name and number of the lawyer representing him he said if he was not being represinted by one he recomended he contacted him to discuss this matter. That if he did not contact him that day he would have to assume he had no intentions of contacting his office. And he would proceed with actions that may directly impact him. He recorded and documented this phone call to prove he had notified him of this matter. Can they take his house and put a lien on his home. Can they sell his home if he passes or make his children pay it off when it’s been willed to them. He has no other assets and no vehicle other than a 2000 dodge pick up that is worth less than a grand. Can they come to his home and try to collect.
If he is sued for a collection and a judgment entered in the court record, that could result in a lien placed on the home. That lien will eventually need to be paid if want to sell the home, refi, or it passes to his heirs.
It is unlikely that debt collectors on the store and credit cards will show up at his home. But if he is sued, those papers are usually served to his residence.
I don’t see where I have covered exemptions from judgment creditors in Louisiana in the comments before, so here are those details for other readers.
Wage garnishment is allowable in Louisiana up to 25%.
Your car value is protected up to $7500.
You have a 35k home exemption in LA.
All necessary household goods are protected.
And while there is no cash in bank account exemption in Louisiana, you know that his sources of income are exempt at the federal level.
He could get rid of all the debt and keep his home no problem with a chapter 7 bankruptcy, which is something to think about.