General creditors may not garnish Social Security benefits per Section 207 of the Social Security Act. That means benefits cannot be garnished by credit card companies, mortgages, auto loans or other similar creditors. However, Social Security income may be garnished under certain circumstances.
Generally, up to 15 percent of the benefit may be garnished as long as it leaves you with $750 after garnishment. So if your monthly benefits are $900, 15 percent may be taken because you’d be left with $765. But if your monthly benefits are $800, only $50 (6.25 percent of your benefit) can be taken to leave you with $750. There may be some exceptions to the $750 limit, which your Dunn Social Security lawyer can explain as it relates to your case.
Circumstances That Could Result in Social Security Benefits Garnishment
While a Social Security check generally is protected from garnishment, the following circumstances may lead to garnishment of Social Security benefits:
Enforcement of alimony or child support payment: These must be court-ordered judgments that may include payments for arrears, interest, healthcare, attorney fees and more. These orders are made to ensure that parents or former spouses meet the obligation to their children or ex-spouses as the court ordered.
Restitution to a victim from a civil judgment: This is to ensure that victims who suffer damages as a result of the recipient’s negligence receive compensation owed to them. An example would be a settlement owed after an accident, such as that involving a motor vehicle. Garnishing Social Security benefits may collect for outstanding payments owed for property damage, loss of income, medical bills and more.
Payment of federal taxes: This falls under the Taxpayer Relief Act of 1997. Again, up to 15 percent can be withheld to pay back taxes owed to the federal government, but the IRS may be able to take up to 15 percent, regardless of what’s left afterwards.
Payment of non-tax debt to a federal agency: This falls under the Debt Collection Improvement Act (DCIA) passed in 1996. It includes debt such as federal student loans, which some older or retired individuals may owe if they cosigned for a child or grandchild’s student loans.
You will be notified of the federal government’s intent to levy your Social Security income. You will have an opportunity to respond to the notice, at which time you may be able to request a hearing. While waiting for the hearing, no monies can be taken from the account. If you disagree with the decision to garnish your benefits, a Dunn Social Security lawyer can help you review possible arguments against garnishment.
Options to Prevent Garnishment of Benefits
In certain circumstances, the garnishment may be prevented. An example would be someone who has no valuable assets, such as a home or vehicle and claims hardship. It might be possible to work out other arrangements to pay the debt back.
It will be important for the recipient to respond to any notice advising of garnishment. Ignoring a notice or not appearing in court if ordered to do so can make the situation worse. Even if a recipient is able to stop garnishment successfully, it may be only temporary.
The possibility of facing a reduction in Social Security income may require seeking legal counsel. A Dunn Social Security lawyer can review your situation and discuss options to respond to a notice of impending garnishment of Social Security benefits.