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.
Hello, I live in Nevada.
Back in 2005 I had filed for bankruptcy and everything went well. Unfortunately after that I worked hard to rebuild my credit. Well now being almost 10 years I have gotten myself extreme debt totaling over $67,500 spread across 29 credit card accounts.. I also have a personal loan with a balance of $6,500. I was able to keep up these payments on these accounts until last February when I became unable to work and had to file for Social Security Disability. I was always on time. Never late and now everything is ruined. I am scared to even go for a consultation with a bankruptcy attorney being the amount I owe is so great. Fortunately I have a very understanding family and I able to live with them to attempt to try to make hardship payments. I called several of the creditors and made those arrangements especially on the debts I owe $4000-$6,500 which is about 8 accounts. The problem is with my drastic income reduction even the hardship payments are going to take just about all my entire check. This don’t include all the others I owe less than $3,000 to. So now those ones I can’t even pay are calling every single day. I am starting to get certified letters. I just can make payments to all of them. This is such a nightmare. I can’t sleep at night. The interest rates on these accounts were well over 20% so the debt just crept up and up over the last 10 years. I don’t want these credit cards to try to say I was fraudulent and accuse me of it. I always paid on time up until I became disabled. I really don’t have much choice but to try to file chapter 7 again. I believe if its been over 8 years I would be able to? So now my next check will come on the 3rd and I am debating whether to even bother making the hardship payments or just give up on all of it. Such a huge mess. I noticed on many of my credit cards they are handled by the same bank which is called Synchrony Bank which totals about $40,000 of the debt. About $7,000 is combined owing Citibank & the rest are different banks. What are even my chances of discharging these debts thru bankruptcy a second time. Is there any hope? My social security income is a little over $1000 per month. They all refer me to credit counseling but with my low income and from what I am reading it would be a waste of time. I would be ever grateful for any advice you can offer me. Thank you , Michael
You are eligible to file chapter 7 after 8 years has passed from your last chapter 7.
Don’t beat yourself up about it. If you are going to file bankruptcy, those hardship payments you are making are a waste. If it were me I would stop those payments and use the money to file instead.
If you filed in 2005 just before the changes to bankruptcy laws, you will find the process is a little bit different today. Consult with a bankruptcy professional as soon as possible. I have a resource set up through the hotline at 800-939-8357, choose option 3, or look through your local phone book.
I live in California. I have a couple very old debts. 1) approx $2,500; 2) approx $3,000. recently I was served with judgements and court levy papers. I have social security. BUT; I work part time and make $750/mo. can they take that money or is that exempt.
They already served my bank and took $400 from savings account (all that was there). this happened before I was served. Can they garnish my wages or should I try to settle with them or should I forget about it?
Thank you
Cathy
That part time money may not be exempt from judgment creditors. I would keep it separate from your social security money that is protected. Maybe use the part time income to pay for things in cash until you resolve the judgment debts.
Who has the judgments against you?
Hi Micheal,
I am very confussed about my situation. I have a law firm coming after me again with a renewal of a judgment . in 2009/2010 I had them automatically every month taking out $850/950 out of my checking account for approximately $10,000. I was under the assumtion that it had been paid off because they never notified me of any problems and money stopped being taken out. I then became so involved with illnesses and deaths in the family in 2011, and forgot about it. a couple of months ago I got a letter from the Lawyers Hammeroff and they renewed the judgement against me again for $10,000. Even tho they stated I paid several payments for about 10 months or so . I sent them a letter and asked them what was going on and they sent me a reply stating that the bill had been paid down to only $3000. And they have added interest, court costs and legal fees all over again bringing the toltal to $12600. I am so baffled by this, and overwhelmed. I wish they would have contacted me back then and said something instead of going on thinking that it had been paid and then sock it to me almost five years later. I want to negotiated with them but am terrified to call them now. Any suggestions? Please help if you can. I live in Glendale Arizona. I was going to go to an attorney myself but I honestly do not trust them. And I wouldn’t even know how to start.
Thank you in advance.
I would go to an attorney, but choose one with debt collection defense experience. I can email you some contact details to the type I am talking about – who all offer a no cost initial consult – if you like?
You can negotiate a lower lump sum payoff in situations like this.
I am curious if you have looked into bankruptcy? Are there assets that are preventing you from discharging debts in a chapter 7, like home equity?
Yes, I would appreciate any info you can give me to help out.
We can’t file bankruptcy tho because we do own another house that my son and his family live in. Both homes are paid off and so is cars and such. I would like to pay off the old debt but I am affraid especially of one attorney (Hammeroff) because they really did not want to work with me years ago for lower payments. That is why they were automatically taking almost $950. directley out of my checking account for several months. This is the same debt I thought was paid off after 9 or 10 months back in 2010. Now they are getting another judgement for $12,600 because they say I owed $3000. In other words why would they stop taking out of that checking account and why would they not notify me back then that it wasn’t paid off.
If you think I should contact them to talk it out, I will try it.
I would like you to send some information on who to contact also.
Thank you again. I will wait to hear back from you.
I sent you an email with a few experienced debt collection defense attorneys. Not that you can defend the suit now, but those attorneys will be ideal to help you resolve this with Hammeroff.
Distance is not an issue in a case like yours, so any one of those attorneys can be just as effective if they are outside of the Phoenix area.
I would encourage you to ask the attorney you speak with about whether to file a debt collection complaint with the CFPB. The CFPB is currently weighing new debt collection rules, and would like to hear from people about the failures of debt collectors, including attorneys, to communicate. This situation with Hammeroff is a major fail that could have been averted with payment invoicing that collectors are simply not required to provide in most states.
I do not think you should contact the debt collector until you have talked this over with one or more of the attorneys I sent you.
Thank you Michael, I will contact one of the attorney’s which you mentioned in your email to me, this coming week.
I will keep you updated.
Again, Thank you so much.
Sincerely,
Maria
Michael, I am on ssi disability in Idaho. I bought a home in 2013 and paid 113,000. I have credit card debit from 3 separate cards, Wells Fargo, Discover it and USA bank. My credit card debit is approx 14,000 dollars between the three and I am not able to keep up payments. I have a 2008 HHR and a small travel trailer that I pay USA bank loan on. Im worried about my home, can they place a lien on my property? Please advise, Thanks Kathleen
I moved your comment and questions over to this page about exemptions. They have to sue you first, and get a judgment, before they can lien your property. I have covered many states in the comments so far, but not ours.
Idaho protects you from judgment creditors in the following way:
75 percent of wages are protected.
$7,000.00 value in your car.
$100,000.00 equity in your home.
$7,500.00 value of your personal household stuff.
There is no exemption or protection for any amount of money in your bank account.
Be sure to read the original article above though, as your SSDI cannot be garnished, and federal rules protect that money in your bank account if there are no other funds commingled. You should also not allow a surplus of monthly SS deposits to accumulate.
Thank you so much Michael, my HHR is paid for, in 2014 I bought a Polaris Quad sportsman HO and paid 8,000 on a credit card for it, can they take my quad if I am sued? I need that desperately tp plow the long driveway of snow up here so we can get out to the doctor in the winter, please advise………I forgot to mention I own this in my previous question.
What is the value of the HHR?
If a judgment is entered, it is possible that the quad is at risk, just not probable. Debt collectors are not overly aggressive in going after household, personal, and recreational items, here in Idaho. Not in my experience. Michigan and some other states… you bet.
Michael in response the HHR is a 2009 and worth about $3,000.00 that is what I determined with an attorney on the phone ,hope it is accurate,it is an LT in good condition, does that sound right to you ? or should I look it up in Kelly blue book.. The attorney called to discuss bankruptcy with me , but again that was his estimate. He said they could take the quad, but then I guess its not as much a risk as I thought. Then what do you think they could do ?
It does sound about right.
As far as how a debt collector could force the collection if they got a judgment, your home could end up with a lien filed against it. That lien could end up getting paid if you refinance or sell.
Michael, how long does it usually take after stopping credit card payments that a credit card company sues you? I am with Wells Fargo approx $4,500.00., Discover $5,505.00 and US Bank $7,359.00 . I assume each card attaches a lien separately and each card sues an individual differently..
There are many variables to list that would go into determining that for each person, bank, credit card, etc.
You have a home with a mortgage you are paying. That alone will make you score higher on the collection scale (to sue or not to sue). Discover sues regularly. Wells Fargo and USbank are not much for suing as your creditor, but they both sell unpaid debts to debt buyers who will target accounts for collection lawsuits.
Your risk of being sued does not generally begin until the account charges off, which typcially happens after 6 months on nonpayment (AMEX and some smaller credit unions are sometimes exceptions to quicker attorney placement, at least currently).
After 6 months, your risk profile will increase with the passage of time, with an even higher likelihood of being sued just before the state SOL to legitimately sue expires.
Now, after having said all of that, you may not be sued at all. It is just best to work under the assumption that it will happen, and plan accordingly.
Good morning Michael,
HELP please!
Live in: Florida
Situation: owe FIA Card Services approx $12,000 from past cc w Bank of Am (originally by another)–
last payment date 8/31/2011;
Andreau, Palma & Andreu, PL have been sending correspondence aggressively over a yr now, even received a summons 3/2014, then was dropped-seemed to just disappear (apparently there was a clerical error), then received notice of possibly dismissing case for lack of prosecution on 2/19/15, they showed judge good cause & now set for telephonic appearance by plaintiff on 4/24/15 , proceeding with motion for Default on Final Judgement since I have failed to file a responsive pleading, last page is a blank Fact Info Sheet but no instructions on what to do with it (is it wise to send them info)?
I also owe several smaller credit cards by various other companies, adding up to approx $6000.
I do not work; quit to care for elderly grandmother after stroke (she recently passed); husband owns business (my name not on main biz acct); he also owes several thousand for credit cards.
Mortgage on our home on about 2 1/2 acres, and my name is on a property that is my father’s (wondering how this will effect him)?
I have 03 minivan, according to kbb valued approx $4800, also ’97 work truck in my name, worth less than $1000
Instinct is to file bankruptcy, but unsure ….is it best option? Is it too late since only a wk away from court? if so, should hubby file as well or just me? will it effect my vehicles & most importantly my father’s property?
I sincerely appreciate your time,
Christine
It is not too late to file bankruptcy. If you have not already talked over your situation with a bankruptcy attorney, you can call my hotline 800-939-8357, and choose option 3. I would encourage you to read this article about finding and hiring a chapter 7 bankruptcy attorney.
Once you have all of your questions answered about how the chapter 7 would impact you, I think you will find your instincts are correct.
Whether you and your husband file together, or just you do, all household income and exemptions are typically going to calculate into the process. If all his credit cards add up to a fairly small amount, it may make sense to keep him out of the process.
Post an update with what you learn, or decide to do, and if you have additional questions. But I would try to knock out a bankruptcy consultation quickly in case you learn something that suggests you should avoid it, leaving yourself some time to consider other options for the FIA card services collection account.
I am on social security and so is my husband. My check goes into a joint account and his goes into his own personal account. I have racked up about 5300.00 in credit card debt on my own. This includes 2 cap one acct, 2 fist premier accounts, care credit, amazon and walmart, along with first savings and first national cards. I am making min payments but to no avail. I know that Social Security cannot be garnished but my question is if I go into default do credit card creditors typically put a lien on your home? We filed bankruptcy in 2011 and this has been discharge and we are paying regularly on our home but did not do a reaffirmation with the bank. Thanks for any help you can give me!
If you are sued, and a judgment entered, liens are one of several extra measures the debt collector has to get paid.
The state you live in can impact the likelihood of that happening. Where are you?
Thanks for you reply! In answer to you question I live in WA State.
Washington state judgment exemptions and protections include:
Limits wage garnishment of up to 25 percent.
Protects the value of your car up to 3,250 dollars with 3k of extra protection possible.
Up to 125 thousand dollars of home equity is protected in Washington.
6500 dollars in household goods value, and twice that if married, the potential for an additional 3k value in a wild card exemption.
Washington protects 200 dollars in your bank account, with the potential to claim an additional 500 dollars exempt from judgment collection as part of a larger wild card.
Hope that helps.
Yes it does thanks so much! I will continue to pay as per usual but was just worried that if it got to a point I couldn’t there would be major problems. We bought the house for 99000 and the loan left on it is approx 72000, so I assume I am safe there!
I’m retired and receive monthly deposit to a local credit union social security and AZ State retirement (ASRS) monies. Recently a garnishment attempt was made against this account from a court ordered judgement from a previously unpaid credit card debt. The response from the credit union to the credit card attorney indicated that the monies in the acct at the time was SSI and thus protected. But no mention of the ASRS monies.
Are Arizona retirement deposits protected from garnishment? Thanks
I would contact an experienced debt collection defense attorney in Arizona, or your plan administrators office, for a reliable answer. I can help with locating the type of attorney that is likelier to have a clue if you like. Let me know and I will send you an email with contact details.
Hi, I am 72 years old and live in SE Michigan. I am getting Social Security and have a 401k that I am drawing from every month just to pay the bills. That will run out in about 7 months. I filed bankruptcy, chapter 7 in 2011 and like an idiot, I was offered a credit card and now have that maxed out. I have 2 mortgages also.
When my 401k runs out, I don’t know how I will pay the bills. Do you have any suggestions for me? Can I stop paying the credit card and 2nd mortgage?
How much equity do you have in the home? How much is owed on the credit card? If you were not paying the credit card, would you be able to meet your bills?
Who is your second mortgage with?
No equity. Bottom fell out a few years back and has not returned yet. I owe almost $6,000.00 on the credit card and my second mortgage is with CitiMortgage.
Talk to a bankruptcy attorney about your options. You cannot file another chapter 7 for a few more years since the last one, but you may be able to do the chapter 13. You may be able to file chapter 13 and cram down the 2nd mortgage. If the math works out this way, you can even eliminate all/most of the credit card payment.
Will lower costs for the home help you make your bills?
Is the home just not something you are going to be able to keep?
If it were me, I would stop trying to sustain the unsustainable using money that creditors could not get to even if they sued (your 401k).
I actually need $1000.00 per month over and beyond my social security to make all of my payments. Credit card, mortgages, car payment and household bills. Between my two mortgage payments they equal about $1040.00.
Your situation is not sustainable. With no equity and the limited income, I would preserve all cash starting immediately, including stopping drawing from any retirement accounts. Besides the credit card bill, I may stop paying the first and second mortgage if I could not sell the home and break even, but stay in the home for strategic cash preservation reasons, saving up what I can to make a transition to some other living situation.
Talk over your situation with a bankruptcy professional right away. Figure out the timing implications of any decision to file chapter 13 bankruptcy. The only reason I would consider if I were in your shoes would be if I was going to try to stay in that home. And I would be very practical about that decision. If after calculating the payment on the 1st, taxes and impounds, costs for upkeep/repairs etc., it costs less to stay in the home than somewhere else, I try to stay. If not, I move on when ready.
Thank you very much Michael. The only reason I might like to stay in this home is that it was my mother and dad’s home. I was trying to improve it and have in many ways. But I was forced to retire and that’s when all this happened. I also put my nephew’s name on the house, jointly, a few years back. If I decide to let the house go to foreclosure, should I do a deed to remove him from title?
Is your nephew named on either mortgage?
No he is not. Both of the mortgages are in my name only.
Talk to him about it.
I will talk to him. But just wondered if it would be best to get him off the title.
I have stopped payment on my credit card and will not make anymore mortgage payments. The Credit card company has already started calling me and I am sure the mortgage companies will as well. Should I answer those calls?
It is not a bad idea to pick up calls from creditors once and a while. I encourage talking to creditors and collectors when peoples goal is to later settle their debts for less. With your debt solution expected to be bankruptcy, I still think it is a good idea for all of them to have notes in there files about your financial hardship and fixed income. In some cases it will lower the amount of collection calls you receive, so that is worth it. But you could also potentially prevent accounts from reaching critical stage collections for a longer time, which can allow for an easier/longer transition period before you file for bankruptcy.
Have you talked with a bankruptcy attorney yet? You should run all questions and concerns through the attorney you decide to work with. I just finished up an article I have long been meaning to write about how to interview and hire an attorney for filing chapter 7 bankruptcy.
No, I have not talked to an attorney yet. As we discussed earlier, I have already filed Chapter 7 and if I no longer can afford to keep the house, I don’t think Chapter 13 is an option, is it?
Thanks for reminding me of the prior chapter 7. You cannot file again for 8 years from the prior discharge you received.
Chapter 13 would not be an effective option, and you are fairly noncollectable. I would encourage you to read the collection calls article I linked in my above comment, and take a few of the creditor calls to relay your situation.
I have been thinking of possibly doing a short sale. At my age, do you think this is a good idea instead of going thru a foreclosure? I have seen a realtor and she gave me all the papers to fill out and it just seems overwhelming. I guess I would like your opinion on this.
Do you happen to know how long the foreclosure process can take in your area?
I have been told that it takes about 6 months and maybe another 6 months before eviction.
If I am concerned about where I am going after leaving, and the costs and expenses associated with the move, I would wait out the foreclosure, as opposed to the short sale.
Are you looking at the short sale as a cleaner break?
Yes, I am just trying to be responsible, but I don’t know if I am just wanting to do that to just save some embarrassment. I also am thinking of all the stuff I have accumulated and how to get rid of most of it before I have to move. If, I did do a short sale and it sold quick, I don’t know what I would do with everything.
I am normally all about preserving time and cash flow in these situations. If you need one or the other (or both), riding the foreclosure out is often worth the cost of some humble pie.
Hi, I am not sure if you can help me but here it goes.: I have three old debts. The one that has me overwhelmed is coming from an law firm. In 2008 & 2009 they were taking out of my checking account almost $1000. per month. (they would not accept less). It really put a drain on me since I had several other bills @ the time. I was getting a social security check in the amount of 643.00. Anyway, they stopped taking money out after 9 or 10 months. I assumed it was paid off. I did not hear from them again until this past November and they sent what looks like the same amount they are suing all over again. which is around 11,000.
My husband and I have just had a levy put against our account which is just social security that we were trying to save in case one of us gets sick or any major repairs to the house and etc.
I called the court and they said that they can in fact levy the social security money. This is another bad debt but that also seems like it was paid back in 2007. I can not understand how this can be happening. What can I do if anything?
It would help if you posted more details.
Who was the debt originally owed to?
When did you stop making payments?
What was the name of the plaintiff that sued you that then garnished you in 08? Who was the attorney collection firm that handled that case?
What was the amount of the judgment?
What state are you in?
Hi Michael. First I want to tell you Thank you for taking your time to have this site. I have learned so much reading others questions and your professional answers. I have written here before. I stopped paying my 6 credits cards 2 months ago as I just can’t pay them anymore. All cards together come to around 16,000. I have Social Security and small Qualified Pension 401( cant remember the letter they said but know it was not K) from Barclays. I plan on moving my pension from direct deposit to them sending me a check. It’s only $102. But I know they can’t touch my SSA but nervous about pension when it comes to a judgment and the bank. I also have a 2006 Toyota that’s paid for. I know I’m taking a big risk with my car. I live in Oregon. My question is I don’t understand the Judgment part. If one or more of my creditors brings a judgment against me, can they take my SSA and pension because of the judgment? I know they can’t touch my SSA without a judgment but can the take it if they file a judgment against me. Also would it be illegal to put a second owner on my car or sell my car to friend or family member. No matter what they do they can’t get any money from me. I don’t have it. I can verify that. Unless of course the question about judgment. One more question. should I send them letter telling them about my financial situation and income sources on why I cannot afford to pay?
Thanks
Unsecured creditors do need a judgment before they have any extra ordinary collection rights. There are a few exceptions to this, like child support, some tax debts (after some lengthy administrative processes), interception of a tax refund, and some other outliers. None of those apply here with your credit cards.
You may want to contact a legal aid office in Oregon and confirm with an in state attorney that you do not have much risk. It would set your mind at ease.
With ajudgment, that judgment creditor cannot garnish social security at all. And if you only have that on deposit in your bank account, not even then (but do not let the funds pile up in there).
Talk to an attorney about how you want to sell your car to a family member or close friend as a part of regular estate planning, and not to avoid creditors who may never pursue you in court anyway. See what he/she responds with.
Oh… and I would not send the letters if it were me in your shoes. I say that because I know it will not make a difference. It may be handy to write one up and have it to include in other communications with a few debt collectors that could potentially end up with one or more of your accounts.
Thanks so much Michael. And once again Thank You for your time and for what your doing.
Sincerely,
I live in Brooklyn, NY. Have 4 credit cards with total debt of close to $10,00. Stopped paying all about two months ago because I could not afford any more. I receive Social Security and small pension. This is my only monthly income. Have no bank account and no other assets. Received letter from collection agency on one of my accounts. Other companies keep calling me. Can they take my social security and pension? Should I call or write to them and explain all this? Don’t want to have my checking account frozen as this is my only account where I can access my money. What should I do?
What should I do in this situation to make sure my SS and pension cannot be touched.
They have to sue you and get a judgment first, before your at risk from extra ordinary collection actions. Even then, your monthly social security is going to be protected. Most pensions are protected from garnishment at the source, but not necessarily once the money is in you bank account.
Here are the protections from judgment creditors in New York:
90 percent of wages earned in the last 60 days, or 30 time federal minimum wage, are protected from creditors in NY.
Your car value in NY is protected up to 4k.
Home value protection in New York can vary by county, but ranges between 75 and 150 thousand dollars.
All household items are protected in NY.
New York residents have 1,740 dollars cash in their bank protected, with a possible 1k more that can be added if there is no homestead exemption taken.
Very similar to the reply I posted to Jane earlier today, you have options to think about later if sued.
Hi Michael
I am 61 yrs old and permanently disabled and live in Wisconsin. My income is a small amount of disability and the rest SSI. I have 30,000 dollars worth of credit card debt due to circumstances out of my control. I have not made any payments for 5 months. I can not afford to make payments with my low income. It is from 4 different cards. The most on one card is 12,000. My house is paid for and so is my car. My house is worth around $110,000. and my car $9,000. I was told by one attorney I would more than likely have my house taken away because the homestead exemption in WI is $75.000 and my car too because the exemption for that is $5.000.
I’m so upset. Can you give me any advise? Is this true? I’ve received a lot of phone calls and just bills in the mail so far. Appreciated any advice you could give me. Thank you.
Your bankruptcy exemptions are what they are. Sometimes you can plan ahead for these things with some estate planning, but talk to an experienced attorney about that.
If you do end up being sued on one or more accounts, you still have some options.
You can negotiate a lower lump sum pay off amount. It may be better to try and identify the accounts that are most likely to sue, and find a way to proactively settle those before being sued, as the deal you can get may be lower (sometimes much lower) than after the account reaches the court for collection.
You can defend against a deb collection lawsuit with the goal of getting it dismissed and protecting your stuff. It is sometimes less a cost to work with an experienced debt defense attorney of your own, than it is to settle. Your odds of succeeding with a dismissal are increased when debt buyers sue.
I do not see where I have posted exemptions from judgment creditors in Wisconsin, so here are those details:
Roughly 450 dollars per week of wages is exempt for a family of four.
Your car has 4k of value protect with a 12k wildcard.
Wisconsin protects 75k of your home value from judgment creditors.
Your household goods are protected up to 12k in value.
Cash in your bank account is protected up to 5k, and 10k if married.
I have a very old debt from 10-12 years ago that has been resurfaced. I’m guessing the law office that now has this debt purchased this debt from a credit union I owed when I was young and dumb. Every year for the past couple years, this law firm has taken my state refund. I am an Active Duty military member, and I’ve accumulated other debts that I couldn’t even begin to start a payment plan, so I figured they’re getting something back trough the State refunds.
Today, I tried to get groceries for my household and my debit card was denied at the cashier and also at the ATM. I contacted my Military bank and found out that there’s a hold on my accounts due to a garnishment from this law firm. Everything I’ve read says that the only way a military service member’s wages can be garnished is if it’s spousal/child support or alimony, federal or state tax debts. Seeing as how this law firm didn’t go through DFAS to actually garnish my wages, and went straight to my bank account, I have many questions. I don’t know the percentage they’re allowed to take or if they’re even able to do so because they couldn’t ever take my federal refund…so how can they take my federal pay checks (because that’s the only funds that’s deposited into the account)?
I’m in a very tough spot because today is Friday and I have two small children with little food in our home with all of my funds frozen. Any answers you could help me with would be great.
Lastly, I’m guessing they’ve been suing me every year to take those taxes when they did, but if that’s the case, how come I’ve never been served? In the past 7 years I have lived in 5 different locations due to my job, so how could I have been served properly and the only correspondence I’ve received to know I’d been sued is the letter from the State’s IRS office stating that my refund was going to the law firm…?
PLEASE HELP!!!
I know you need immediate help, but there is typically not much same day help that can help unravel all of this. But you can get to the bottom of all of this with help on Monday. Call my hotline at 800-939-8357 and select option 5 to connect with a law office for a no cost initial consult about your options. There may be collection violations that can be pursued at no cost to you, or options you can pursue to get a judgment unwound if you were never properly notified.
I would not waste any time looking into all of this. Call on Monday.
Hi. I have been ill the last few months and do not see it getting better anytime soon without many dr visits and possible hospital stays. To get to the point I am on disability SSI and Social Security for approximately four years now. In the last year I’ve acquired a personal loan and a few credit cards. The loan company knows of my SSI but the credit card companies I believe I had to check “other” where it said where my income came from because my choice wasn’t there. Anyhow I’ve come to find I got in way over my head I cannot make any of these payments not the personal loan (unsecured) or credit cards. This is the first month I haven’t paid and the phone calls are starting that I haven’t answered & have let go to voice mail. I’m so sick I can’t bare to talk about thus with any of them I don’t know what to do? My SSI’s get deposited into a checking account. I pay my rent at which I live at a senior disability apartment complex, my phone bill, my cable bill, take care of my very old car which needs monthly products to keep it in tact plus gas for usual dr appointments (as of now since I’ve been so ill tho I am not driving at all), buy good and personal items for the month as well as household products and I’m lucky to have $20 at the end of the month. What ways can I go about handling these companies? Do I really need to try to have a conversation with them & at some point if I do – what do I say? Can they mess with my SSI money in the bank? I’d really appreciate any advice you can offer, I know that anxiety will only make me sicker. I do feel bad but I though I’d be ok ” Why” I’m not sure. I wish they all just would have said no & actually feel they should have. Thank you so much for your time. Diane P.
Your social security cannot be intercepted at the source for any of these debts. Not even if they had a judgment. If SSI is the only money on deposit in your bank account, that money would not be touched there either. And not with a judgment.
You would want a reason to pick up the phone and talk with creditors, or the debt collectors that will be calling later on. If you cannot pay now, and do not expect that to change at all, there really is not much to say.
If you do pick up the phone by accident, or even out of curiosity, let them know your only source of money is social security, and that you have no assets and are living in senior housing. Leave it at that, and do not stay on the phone too long. If anyone gets nasty, post an update here and I can offer more feedback.
What state are you in?
While I do indeed love in Colorado, I also LIVE in Colorado.
I love in Colorado. I am 69. I have just been put into the category of charge-off by Nordstrom Bank. The outstanding debt is $11,500 ($1500 has accumulated in interest since I discontinued making payments 6 months ago.) I tried to contact Nordstrom Bank in writing several times to make arrangements and they never responded. – I had four different address). I now have communication from Portfolio Recovery as the buyer of the debt. I am married, but this credit card was only in my name. My only income is from SSI and Federal Civil Service Retirement. My car is worth approx 4K. The real estate market in Colorado has really heated up recently, so I believe I have about 80K equity. but lousy credit (561 FICO) so can’t get the 80K out of the house. I know Colorado has a homestead exemption of 90K, but as nearly as I can tell that applies only if you file for Bankruptcy. I don’t have any other funds. I have some other credit cards I am prepared to pay. Can I write to this collection agency that I am judgment proof, or is that large equity in my home something they will opt to go after? I would prefer to avoid bankruptcy
I would not consider you judgment proof. Not with an asset that can have a lien placed on it if sued and a judgment entered.
Here is a breakdown of what Colorado protects from judgment creditors:
30 times minimum wage – $7.78 per hour.
5000 dollars of car value.
Up to 90k home equity. But that does not mean a judgment lien could not be placed and paid off in full (with accrued judgment interest), when the home is sold or refinanced.
3000 dollars in household items.
There is no exemption that can be applied to bank accounts.
Writing to Portfolio Recovery is not going to lead to anything productive in my opinion.
Bankruptcy over this one account is something to avoid. How much do you owe on the others?
Thank you so much for responding.
Isn’t my Social Security and Federal Civilian Retirement judgment proof? That is the only money in my bank account. I thought I read somewhere that if those types of funds are the only funds in a bank account the banker cannot honor a freeze order.
You are saying not to write Porfolio Recovery. What SHOULD I do? Shouldn’t I attempt to negotiate? Could I back up and try to negotiate with Nordstrom again? Or is it too late once an account has been sold to a collection company?
I owe $11000 on one card at my credit union and $6000 to discover. I don’t want to “stiff” the credit union.
I’ll probably live in this house until I die. Will the lien be enforced if my husband or children try to sell it – or will it go away upon my death? (I have had two heart attacks)
I am not certain about the retirement money, so talk that over with an experienced debt defense attorney in your state. The SSI is exempt, but can still become a concern when deposited in an account with other non exempt money.
It was not clear from your first comment that settling was a motivation. If it is, I would not write, but call Portfolio Recovery in order to negotiate a settlement you can afford, and then get all of what is agreed to in writing. How much money can you pull together to fund a settlement?
It is indeed too late to work anything out with Nordstrom Bank now that they sold your account.
The property lien would typically survive your death, and need to be dealt with anyway. I would encourage you to talk this aspect over with an attorney as well, should something like this occur.
Sorry, correction to above post…her income is SSA ($960) a month.
Midland Funding is one very few debt collectors that will stop collection efforts when someone is essentially uncollectable like your mother. You have to communicate with them the details of the situation. Here is more about Midland’s attitude when collecting from folks on a fixed income (see 3b on that page).
My mother is 78 years old. She is being sued by Midland Funding for $4600. She rents an apartment and does not own anything. The only deposit in her bank account is her income SSI ($960 a month). Usually only $3 left in the account at the end of the month. What can happen if she doesn’t go to court?
Hi Michael,
The answers you’ve given to other people have already been so invaluable. Thank you so much for sharing your expertise. I have a question about judgments and writs. My parents fell into a tough period about 10 years ago where they weren’t able to meet their credit card payments. Long story short, Discover card sued them. We didn’t hear what the outcome of that was but I just checked the court site and found that the case resulted in a judgement in 2009 and then in 2012, they got a writ. Nothing has happened but I want to be proactive about finding out what is protected in this case. My parents do not have a home or car (they live with me now) and have <$5000 in their account. My mother works as a senior caregiver and makes about $400 a week pre-tax. They do however have IRAs totaling ~$10k and one annuity that is ~$10k from Prudential Financial. The last few accounts are for their retirement. They are both age 58. Can the judgements go after their IRAs and annuity? They live in CA. Thank you so much for your help!
Those retirement accounts are not generally going to be accessible to creditors, even with a judgment.
That bank account is another story. Whose name is the judgment in, or did Discover name them both in the lawsuit?
Thanks Michael for answering! Discover named both in the lawsuit. I think they will probably just keep the bare minimum of what they need in their bank account and put anything else over that in their IRA. For the time being, we haven’t heard anything at all so these are all just proactive measures. Thank you again!
I live in PA and am being sued by an attorney hired by Discover Card. I am disabled and have a teen age daughter. I receive SSDI and my17 year old daughter receives Social Security (but I’m NOT on my daughters bank account) because I’m disabled. I have a mortgage, and a 2002 vehicle. If the credit card company sues me and wins a judgment can they Sheriff Sale our personal property? I don’t own much and the property in our home is 2nd hand that I purchased at yard sales. What can I do?
The SSDI you receive, and the social security sent to your daughter, are both exempt from collectors like Discover Card.
I know this would not apply to you, at least not right now, but your wages cannot be garnished for debt like this in Pennsylvania.
Your car value is only protected from judgment creditors up to 300 dollars in PA. Yours is one of the worst states in the nation in this regard.
There is little to no protection for your home in PA. A judgment creditor is likely to place a lien on it, but may not go any further than that.
How much equity do you estimate you have in the home?
Your personal items in the home are not very well protected either. In PA, you get that same 300 dollar exemption for your household stuff, but you have to use that to protect other things like your car too.
PA is one of few states that protect wages from garnishment, but that is the only area of protection that it leads in. Every other area is a fail.
If you cannot settle with Discover Card, have you looked at your options with chapter 7 bankruptcy? You can speak to a professional about that using the hotline number you see to the right of the screen. The call is free.