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Is Your Social Security Safe from Creditors?

Gerri Detweiler Gerri Detweiler has been helping individuals find reliable answers to their credit questions for more than two decades. She is the author or coauthor of five books, including her lastest: Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis. She is also host of the syndicated radio show, Talk Credit Radio, and serves as Director of Consumer Education for Credit.com. You can reach Gerri at TalkCreditRadio.com.

Is your Social Security income safe from creditors? I covered that topic recently on my radio show Talk Credit Radio. Following is a transcript of that episode. If you prefer to listen to it, you’ll find a link to the podcast at the end of this piece.

I’ve been getting a lot of questions about Social Security Income and whether that is safe from creditors. It’s really an important question because there are a lot of people who basically rely on that income as either their sole or primary source of income.

What I’m talking about here are several different programs. One is your Social Security retirement benefits which most people collect when they reach retirement age. The other programs are the Social Security Disability Income program which is a program for people who are deemed by Social Security guidelines to be fully disabled, and the other is SSI which is the Supplemental Security Income program.

SSI makes monthly payments to people who have very low income and very little in the way of financial assets or resources. It can include those who are disabled and it may also include children as well as adults.

The benefits aren’t huge under SSI, for example, around an average of $500 a month or just over that. And for the Social Security Disability program, the average benefit is around $927 a month. It’s not a huge amount of money, so you can see why every penny would count for someone who’s relying on that income.

So what happens is, someone can run into financial problems and they can be threatened by a creditor or a debt collector that that income may be taken to pay the bills that they owe. Now in general, however, that income is safe from creditors.

There are very few circumstances where someone can go after it; past due child support, past due taxes, federal student loans which can haunt you forever are some of the situations where that income could potentially be at risk. But otherwise, it can’t be garnished.

So, here’s the second question that comes up from someone who may be facing these kinds of phone calls. If they have other source of incomes or let’s say they’re married and have a spouse who earns the income, they say, “Well, how do I protect that particular income separately from the other income that I may have coming in?” And that’s a very important and valid question.

I’d make two recommendations.

The first is that you always keep Social Security benefits and other exempt forms of income in a separate bank account, and DO NOT share that bank account with someone else. I’ve seen situations – and any consumer law attorney who deals with debt problems have seen situations – where a creditor or debt collector has gone after the other person or gone after other income and frozen the account. And in the meantime, checks may be bouncing, or important bills are not getting paid while they try to straighten it out.

Or, they’ve actually been successful in taking money out improperly and then you’re fighting to get that money back into the account. So, what you want to do is make sure that you have a separate account with no one else on that account if you’re receiving those kinds of benefits.

Now the government is moving to all direct deposit. If you aren’t on direct deposit by now, you probably will be soon. And, financial institutions now will be required to start to work with a program that will flag income from those programs. So presumably, that income would be considered safe and protected from creditors or debt collectors.

But again, it’s essential to have a separate account that you use just for that income and don’t put someone else on that account. You could put them “payable on death” if something happens to you but II wouldn’t share that account with someone else.

In addition, if you are getting calls from debt collectors and they have threatened to go after your Social Security, or your your SSDI or SSI income and say they will garnish those funds or take them out of your bank account, they’re likely making an illegal threat under the federal Fair Debt Collection Practices Act. They’re simply not allowed to do that.

If that happens, what you want to do is talk to a consumer law attorney and find out how you can actually get free help. Consumer law attorneys who specialize in working with consumers who are dealing with abusive debt collectors will actually work with you at no cost because the debt collector will have to pay the attorney’s fees if they’re breaking the law.

You can get a referral to that at www.debtcollectionanswers.com, where you can also download a free chapter of the book I’ve written about dealing with debt collectors if you’re in a situation where you think that they’re harassing you or perhaps making illegal threats.

So those are the basics of making sure your Social Security income is protected and in most cases it is. If that’s an important source of income for you, you can rest assure that at least that money should be safe from creditors.

Listen to the podcast of Social Security and debt collectors here.


Talk Credit Radio is a syndicated weekly radio show hosted by credit expert Gerri Detweiler. You can listen to the program live each week online, or download podcasts 24/7. Gerri answers credit questions on the air and welcomes your calls. She is the author or co-author of five books about credit, including Debt Collection Answers: How to Use Debt Collection Laws to protect your rights.

This entry was posted in Debt Negotiation, Financial Planning. Bookmark the permalink. Read more articles by Gerri Detweiler. (Also see articles by all authors and articles in all categories.)

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