There are a number of government programs that provide benefits to individuals who are or become disabled. Two of the most common benefit programs include Social Security Disability Insurance and Supplemental Security Income, both of which are administered by the Social Security Administration (SSA). Social Security Disability Insurance (SSDI) benefits are paid to qualifying individuals who become disabled and are unable to perform substantial gainful activity. To qualify for these benefits, you must have worked for a certain period of time prior to your disability, be deemed actually disabled by the SSA and earn less than $1,090 per month.
To be eligible for Supplemental Security Income (SSI), on the other hand, your work history is irrelevant. Rather, SSI is a needs-based program that pays benefits to permanently disabled individuals (and/or their dependent children and spouse(s)) who have less than $2,000 in personal assets or less than $3,000 in assets when combined with their spouse. If you qualify for SSI payments, then you probably qualify for other state-sponsored benefits like Medicaid and food stamps.
Can My Benefits Be Garnished?
Because you must be disabled and earn or have very little to no assets in order to collect SSDI and SSI benefits, these monthly payments are likely the only source of income you have to live off-of and pay your bills from. So, the question arises whether creditors or debt collectors can garnish your SSDI or SSI benefits to cover your debts?
The simple answer is NO, with a few critical exceptions.
Here’s How It Works
As a general rule, debt collectors cannot touch your SSDI or SSI benefits to cover your debts. If your benefits are received by direct deposit from the SSA, then your bank has a duty to protect up to two (2) months of benefits from creditors and debt collectors. If you have more than 2 months’ worth of benefits in your bank account, then the bank must protect 2 months’ worth of payments for your use and freeze the rest of your money until the court decides whether these funds can be garnished or not.
For example: let’s say you receive $1,000 per month in SSDI or SSI benefits that are directly deposited into your Wells Fargo checking account. You have $3,000 in your account from the past three (3) months of payments. Then, Wells Fargo receives a request from one of your creditors to garnish your bank account in order to satisfy the debt. Wells Fargo must leave (not freeze) $2,000 for you to use to pay bills, eat, pay your living expenses, etc., and freeze the remaining $1,000. By freezing $1,000, you cannot use this money; however, the bank will not automatically give this money to your creditor, either.
If the bank freezes money in your account, they must send you a notice of garnishment. In this situation, the court will decide whether your frozen assets should be used to pay debts. The judge will make this determination based on state law and the source(s) of your income. This is why it is so important for the court to know that your income is from SSDI or SSI benefits. in most cases, the court will not order that these payments be garnished.
There is one caveat. If you receive SSDI or SSI benefits by way of paper check that is mailed to your house which you then deposit into a bank account, your bank is under no obligation to protect at least 2 months’ worth of payments. If the bank receives a garnishment request from a creditor, it can freeze your entire bank account. You will then have to go to court and show the judge that your income is received from the payment of SSDI or SSI benefits and should not be garnished.
Important Exceptions To Non-Garnishment
There are a few, limited exceptions to the inability of creditors to garnish your benefits. When it comes to SSDI payments, government creditors can garnish your benefits to pay for unpaid federal taxes, federal student loans, and any outstanding spousal or child support payments that you owe.
However, your SSI benefits cannot be garnished to pay debts – even if you owe federal taxes, student loans or spousal/child support.
If you receive SSDI or SSI benefits and one of your creditors is attempting to garnish your payments, you need the assistance of a qualified attorney—like those at Fitzgerald & Campbell— who is familiar with the SSA’s rules and regulations as well as the law governing debt collection. Our attorneys have decades of experience representing clients in all types of debtor defense cases and we are here to help you!