Is SSI exempt from garnishment and levy?
Mr. Bovee's answer to lady who's mom is living off social security and being sued by Chase Bank - I was under the impression that with the new credit card reform laws that went into effect in 2009, if a person is sued by a collections agency, bank or creditor law firm and that person for 60 days prior to the judgement when loosing the suit has had nothing in their account but deposits from social security or disability, the bank has to legally refuse the freeze order? Is this correct, partially correct, or urban rumor?
Is SSI exempt from garnishment or a bank account levy if there is a judgment for a credit card debt?
—vincent
SSI is exempt from garnishment in most instances. There are limited exceptions, such as tax and student loan debts, spousal and child support, and a few more. SSI funds that are in a bank account are protected from levy in payment for a court judgment such as an unpaid credit card debt that has been through the courts. Problems arise when there are funds in the bank account that are not related to exempt sources. The levy would be processed by the bank and it will be up to the account holder to prove exemption and/or a portion there of. It is a hassle, and most especially when there are bills set to be paid that there are no longer funds for.
One approach to take is to set up an account for direct deposit where only SSI, SSDI or other exempt income is deposited and place no other funds in that account. If you find yourself in a situation where there is a judgment and your account is vulnerable, speak to the bank and let them know of the concern and that only exempt money is in that account. The bank will be able to see where the direct deposits are from and would be unlikely to freeze funds if presented with a judgment and levy.
Having said all of this, I have seen banks make errors in this exact situation. Reversing their error is not complicated when only exempt funds are in the account.
The exempt status afforded to SSI is not the result of the CARD Act.
About Michael Bovee
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Michael 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, and is a regular contributor to several personal finance websites.
