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 great info you offer here
heres my situation
1. im waiting for a disability hearing in jan 2017 after 3 long years
2 my ex wife has a judgement against me
how do i protect my homestead property (homestead should protect this)
how do i protect my car, and my funds in my bank account?
If im awarded disability benefits, I will be receiving a lump sum. I believe that SSDI is protected, is it also protected in the lump sum payment? When deposited into my account?
if would email the response or link to the response. My memory isnt the best with my disabilities.
Talk over your situation with an experienced attorney. I can email you a list of contacts if you like? What state are you in?
Property have a l lien on it in lawyer trying to foreclose 4 a collector need a lawyer in Shreveport Louisiana
I sent you an email with contact details to a few attorneys with the experience you need in Louisiana.
I live in nyc and was forcibly retired from A 19 year City job in June 2016.
In August I lost A court case and student loans and IRS are taking SSA leaving me 750 month and get A Pre-Pension allowance of just over 500.00 month. As A result my rent is 3 months late and my con ed bill has A turn off next week I live alone. What should I do???
Have you looked at your hardship collection options, or being deemed un-collectible by the IRS?
What was the court case about?
It was A Civil Case In Small Claims Court. It dragged on since 2014 and I lost the Case.
The biggest issue is that DOE will not grant any relief from garnishing my SSA almost as soon as I began receiving it. It leaves me with little money to pay even rent.
I’m on SSI disability I have about 13,000.00 credit card debt and am paying for a new car. I must keep new car do to illness requirements. I want to know if I file bankruptcy Wichita I also cannot afford will they take car away
If you are still making payment on the car you can often reaffirm that debt and continue to make your payments, and keep the car.
i just received a writ of summons from the state of new hampshire judicial court for a debt of 7300.00 from a past loan. i am on social security and collect unemployment, but unemployment will end soon. the writ says something about filling out an appearance form for the court. i agreed with the atty for the debtor to send in 100.00 per month and have not signed anything yet. i got so nervous when the atty called i did not think about all my expenses just to pay rent and live. i do not own a home and have a 2004 car.
If I were in your shoes I would not agree to pay anything if I could not afford it. There is little a judgment creditor can do to force payment if you are judgment proof and meet your states exemptions.
I just received a summons, from the 2nd divorce lawyer I hired. He is suing me for services rendered to finish up my divorce. I also, around the exact time my divorce was completed) started receiving Social Security Disability. I had also filed bankruptcy, but the lawyer doing that for me, was also with the same law firm, so of course he’s not going to add them. I have been hospitalized in October of 2015, January of 2016, and February of 2016. I had a blood clot the length of my leg. I am waiting to see if I might need (since I am in severe pain) 24/7 another back surgery. Can this lawyer win the lawsuit?
If the attorney has a legitimate claim he can certainly win the lawsuit. But that does not necessarily mean he can get paid.
My Washington state father has fallen victim to scammers and has racked up credit card debt. He lives from social security check to social security check. His only other money is $400.00 monthly from his reverse mortgage. I know his social security is exempt from collection. My question: Is the $400.00 a month from his reverse mortgage exempt from collection?
Washington protects $200 in the bank account (and all SSI). There is a wild card exemption in Washington that can increase protection for cash in your account by another $500.
After twenty years of working I forcibly retired due to my health no pension now I live on sic sec disability just turn 60 and I made repayment plan with one of my debtors but it gotten pretty tight to make ends meet die to I paid a mortgage I am single light water groceries. They threaten to take me to court. I reside in Puerto Rico are my benefits protected and where can I get help here.
Who is threatening court? What is the debt about?
Due to a trauma in my family I am mentally no longer able to work. My only income now is social security. I am 65 years old and will be 66 in December. I was told it would not be worth my filing a bankruptcy. Can the 3 credit cards and one loan send in 1099’s to the government and force a tax payment on me. I only receive $860 a month.
I do not see too many banks, other than Chase, proactively sending out 1099c’s on cancelled debt that were not settled. Even if they do, not everyone owes tax on forgiven debt.
I live in Illinois. I became a widow on August 3rd of this year. MY husband and I had just moved into our condo last September. The condo was paid for in cash as was my car. I receive ssdi monthly. I’m considering filing a chapter 7 due to excessive medical bills. Will creditors be able to attach a lien on my home or car.? Will chapter 7 prevent that?
Talk to an experienced bankruptcy attorney about your options. Illinois protects very little of home equity, unfortunately.
I believe I have a somewhat unique situation because I have not been able to find answers. I was awarded disability in March of this year so I received a lump sum and now monthly payments. About a month ago, I received a judgement from an old creditor. I filed a request for exemption (disability) and the creditors attorney’s office opposed the exemption. I now have a court date in a week regarding the claim of exemption.
I understand that tracking the lump sum money is very important. I feel I’ve done a good job with this. However, I still have money left over from my lump sum. Do you know if they can touch that money? I transferred it to an investment account. Also, if the judge rules in my favor, will the bill collector be able to pursue this again in the future? And one more issue is that I used the same bank account that I’ve always used. My significant other would write me checks to cover household expenses. He only wrote me two checks after I received my lump sum. Naturally this is not income and I have a copy of all those checks. So, I’m not sure if this is something that needs to be addressed as well.
So I’m wondering if I should settle this or go for an exemption. Naturally I would like to win an exemption and be done with this, but not if they will continue to hound me.
Thanks in advance!
Call and speak to the people at HELPS, who I interview in video in the above article. You can reach them at http://www.helpsishere.org
If you are better off settling it, let me know, and I can offer more feedback from there.
I live in Colorado. I COULD pay all of my debt if I could refinance my mortgage. My condo it worth $325,000. I owe $170,000 and I have had four different places tell me that my DTI is too high, even though I know I could easily pay the mortgage. My FICO IS 658 (because two off my credit balances are less than two years old). If I try to go Chapter 7, can they take my condo. My present mortgage is 1200 a month and if they take my condo, the rents around me are at least $1200 a month and that is for a one room rental in a “not so nice” area. I am afraid I would have to give up where I live. I got into trouble by helping my son in law after he lost his job. He is making money now but just enough to feed his family and not much more. I needed to add about 95K to the mortgage making it about $260,000. The banks and three other places won’t do it because of my DTI. My pension and social security are about $3,800 a month. I have tried over and over to do the right thing and pay my bills but the banks are telling me the underwriters will not approve the loan.
Your equity appears to be too high for your state to not have your home impacted by a chapter 7 bankruptcy. Who are the credit card banks you are dealing with? What are the balances on each account?
Citibank $4,500 Barclay $25,000 and Wells Fargo $23,000
Citibank may not sue all that much currently, but they sell to debt buyers that do. Barclay is a real risk to sue currently, and Wells Fargo is active in the courts again.
At the end of the day, if you were sued and a judgment entered, there is not a lot to collect on until you try to refi, sell, or pass on your home.
Citibank $4,500 Barclay Bank $25,000 Wells Fargo $23,000 A regular loan (Prosper) $8,500 and a car loan for $22,000. My mortgage is 1200 a month and my HOA fees are 225.
If a chapter 7 is out of the question, what would you suggest. I feel like I am drowning. So far I have kept everything up to date. This money will be the month I will start to get behind more than 15 days. I have managed to stay up to date because of family helping but they cannot anymore.. As you can see my family does all it can to help each other but we are all at a time when we are all up against the wall and not able to help anymore.
Prosper loan are sold off to debt buyers currently. That buyer sues.
You may just decide to default and let the chips fall where they may. You can look to put out fires with any creditor that sues, and could save up money each month to handle later situations that arise. Family may be in a better situation to help later too.
Sometimes it just is what it is for the time being.
I tried to refinance my home, and I talked to the creditor to get a loan resolved in with I cosigned a car loan for my daughter. She gave the car to me and was not keeping insurance on it. There is 12000 owed on the loan and she has destroyed the value of the car so selling is out if the question. I am on disability and I have a pension . What can I do i cant afford it but was gonna try. But I can’t make a payment like that and insure it. They don’t want to work with me so can I give it back and can they garnish my income or freeze my bank account?
They would have to sue you and get a judgment before they could try any of that. Even then, your disability and pension have protections. Do you own a home?
I’m a widow and disabled. I’ve filed for my va pension and disability. But at this time have no income . I live in Tennessee. I’ve lost two husbands and gained all the debt. So were do I stand being threatened with Lawsuit by creditors. Please tell me. Thank you and God bless.
Those 2 income sources are protected. Do you have a home?
How much do the debts add up to?
my wife and i are on social security disability. in nevada. this is our only income. we have credit cards way over our heads, but can keep up on them if we let a fifth wheel travel trailer go back or repo. we haven’t used it in five years because of medical reasons and been paying on it for about eight years. its in wifes name only. we owe about forty two thousand on it. if we let it go back to bank can they collect any moneys from her or me?
In those situations the bank will auction off the 5th wheel and apply the sale price to the loan balance. If there is not enough money to cover the loan there will be a deficiency balance. That becomes an unsecured debt that will end up in collection.
What are the totals on the credit card debts?
Right at 20,000 I want to keep paying cards but can’t if I keep paying trailer. Can they collect on my s.s. ? I do own house with bal of one hundred forty tho. With maybe twenty five tho. Equity
Home ownership makes you more of a collection target. Why not shed the RV and the credit card debt in a chapter 7 bankruptcy? Given the exemptions in Nevada you would be able to keep your home.
Your social security is protected from creditors, even if they get a judgment.
My husband died in an accident on Easter morning. Obviously this was very unexpected. I then did incredibly stupid buying like most widows – I guess trying to fill the space he left. I’ve gotten myself into a position when I cannot pay my credit cards at all. I still have our home and want to keep it. Before my credit got really bad, I got a new car to replace my 10-year old car. I live in Florida and am currently being garnished by the gov because they claim they overpaid me for SS disability. I disagree but did not challenge the garnishment because I was making payments – well, my husband was as he did the bills. Ironically I will have to go back on disability soon as I have an incurable, progressive disease. I cannot find a disability lawyer to help me and don’t know what to do about the credit cards. I feel horrible…
I would look into chapter 7 bankruptcy to deal with the credit cards before doing anything else. Talk to an experienced bankruptcy attorney in your area.
I had a Toyota truck repoed and they sold it for less than I owed on it . Toyota took me to court and won the case $11000. I am on disability and only hav around $500 in my checking account. My lawyer said there is nothing Toyota can take even though they won. My case is a hardship case. My husband had a bad medical injury and is in nursing home since July 2015. We have no assets. We have lost our home. I received a notice in mail this week saying they had won and I owed 11,000 and also they said they haven’t heard anything from me in 20 day. It also said there would be an 8% per annum what ever that is. Am I going to have this hanging over my head for the rest of my life? I have PTAs and high anxiety with panic attacks. I live in Indiana. Since it is a weekend I can’t get a hold of my lawyer and I am driving myself crazy with worry. I’ve never not paid my bills so this is the first time I’ve had to deal with this. Please give me something to go by. Thank you.
It sounds like you are judgment proof. You will have to deal with the judgment eventually, as it will not be going away, and will grow by 9 percent a year (that is what the per annum means).
You can file chapter 7 bankruptcy and get rid of the debt. But talk to your attorney on Monday. Meanwhile, try not to fret about this. They are not in much of a position to do anything about the judgment.
I have talked to Eric Olsen with HELPS but I’ve found no way to prove it is a legitimate business. Can you help me find out? They are not BBB accredited.
You can call and ask Eric to respond to your comment more fully. Here are my thoughts:
1. HELPS does not charge enough to be doing the work they do for the wrong reasons.
2. BBB membership does not identify good or bad companies. It just identifies companies that pay the BBB for membership. Many companies in my industry are BBB accredited, and I would not send anyone to them for assistance.
3. Attorneys are licensed. You would check one out with the Bar association. I checked just now and Eric is a current member in good standing since 1978.
We r being sued for $8000 in medical bills from a rehab facility where my husband was due to various health issues, a broken neck being first & foremost. He cannot get supplemental health insurance due to his health problems, nor can I. Therefor all either of us has is Medicare. Now we have a 14 year old car, no home & $50 in a 401k. We both collect social security & he has a three digit pension. Can our social security be attached?
No, your SSI is secure.
I can’t believe these people apparently this attorney must be hungry. I have not worked in ten years. I filed my SS retirement I was afraid these people would take my money. The debtor received his money but he wanting more. Thank you for allowing me to view your video
Would like too know if I just paid a dollar on a 800 dollar judgement, and they don’t except my dollar, is the bill considered as paid in full if they refuse the dollar?
No, that does not pay the bill.