Can Social Security Be Garnished? | Comprehensive Guide

Can Social Security Be Garnished 1

If you owe someone money, there are ways that the court system can force you to pay your debt. Wage garnishment is one of those methods. However, you likely already know that Social Security benefits do not provide most people with enough money to pay for their monthly household expenses since Social Security payment amounts are pretty small. Millions of Americans rely on these benefits to survive, so is garnishment of these benefits allowed? The answer depends on who is attempting to garnish your benefits. If you are afraid that your Social Security payments might be garnished, then keep reading. We will give you all the details about the garnishment of Social Security benefits, including who can and cannot garnish your benefits, which types of benefits can be garnished, and how much of your monthly payment can be garnished.


The Basics Of Wage Garnishment

Before diving specifically into the garnishment of Social Security benefits, it helps to have a basic understanding of wage garnishment in general. If you owe a debt to a creditor, that creditor can take you to civil court and obtain a judgment against you. Once the judgment has been received, then the debt collector can request a garnishment order against you. The garnishment is a court order that can potentially work in a few different ways. The first is a garnishment order to your employer. This means that the debt collection will take place automatically because your employer will be required to withhold a certain amount from your wages and pay them directly to the court. The court will remit these payments to the creditor.

Garnishment generally happens when someone refuses to pay a debt, and it is a method the court will use to ensure the debt gets paid. However, garnishment can also apply to other financials besides just your paycheck. Creditors and collection agencies can also garnish bank accounts, retirement accounts, and even valuable assets, like cars or houses. Now you see why the repayment of unpaid debt is so important. If you choose not to repay the debt, you might find yourself in a dire financial situation. In some cases, the court might even order your bank to withdraw the entire amount of the debt from your bank account at one time. The specifics of the garnishment order will depend on the type of debt, the type of creditor, the amount of the debt, and your personal finances.


Garnishment Of Social Security Benefits

A Social Security Administration sign on a building wall.

So, how does the garnishment of monthly Social Security benefits work? Some people rely on Social Security as their sole source of income, so garnishment of these benefits could be detrimental to those individuals. There are very few exceptions to garnishment of normal wages from an employer, but there are quite a few exceptions to the garnishment of Social Security retirement benefits. The most significant factor that affects whether anyone can garnish those benefits is the type of entity attempting to do the garnishing. Here is what you need to know.


— Garnishment By Commercial Entities

The Social Security Act prohibits commercial entities from garnishing your Social Security benefit payments. In fact, the Act prohibits garnishment by commercial entities of all Federal benefit payments. This includes Railroad Retirement board benefits, veteran’s benefits, Social Security retirement benefits, Social Security disability benefits, and other benefits managed by the Social Security Administration. A commercial entity is one that is not associated with the Federal government. For example, a credit card company or your local bank or credit union that gave you a car loan cannot garnish your Social Security benefits for the repayment of those debts.

In addition, there are also some special rules regarding the garnishment of your bank account by commercial entities. If your bank receives a garnishment order from a commercial entity, they are required to review your account history for two months prior to the garnishment order. If any Social Security benefits were placed into the account via direct deposit, the bank must protect the full amount of those direct deposits. While other funds in the account can be garnished by a commercial entity, the amount of your Social Security benefits cannot be garnished.


— Garnishment By The Federal Government

When the creditor is the Federal government or a Federal agency, things are a little different. The Federal government is not exempt from garnishing your Social Security benefits. One of the most common reasons for garnishment is the payment of back taxes. The IRS can garnish up to 15% of your Social Security payments for back tax payments, and the IRS doesn’t even need a court order to do this. They can garnish those benefits entirely on their own. Retirement benefits in a 401k or IRA are also vulnerable to the garnishment powers of the IRS. One way to avoid garnishment by the Internal Revenue Service is by setting up a payment plan with them. As long as you make payments according to the agreement, they will not be able to garnish your benefits or accounts.

If you owe alimony or child support, you are also at risk of having your Social Security benefits garnished. In fact, up to 65% of your benefits could be garnished to pay alimony or child support that is past due. In addition, your bank accounts might also be garnished and frozen to pay past-due taxes, child support, or alimony payments. In these situations, your financial institution is not required to perform a review of your accounts for Social Security direct deposits.

Lastly, Federal student loans are another common debt that many people owe. Social Security benefits can be garnished to repay these loans. However, there are some restrictions on this garnishment. A maximum of 15% of your Social Security benefits can be garnished for the repayment of Federal student loans, and the first $750 of your benefits have an exemption from the garnishment. For example, suppose you receive $800 per month in benefits. Since 15% of this could be garnished, up to $120 per month could be taken to repay the loan. However, since the first $750 is safe from garnishment, only $50 per month would be garnished. You should also know that this rule only applies to Federal student loans. Private student loans would follow the same rules as commercial creditors in the section above.


Garnishment Of Social Security Disability Benefits

Many people wonder, “Can Social Security Disability be garnished?” The garnishment of Social Security disability insurance (SSDI) benefits follows the same rules as the garnishment of Social Security retirement benefits. These benefits are generally exempt from garnishment by most commercial creditors. So, if you owe a debt to a credit card company or from a personal loan, your disability benefits are generally safe. Similarly, your bank account could be garnished, but your bank would be required to perform a review of your account for any Social Security deposits. Those amounts would be exempt from garnishment.

However, Federal agencies can garnish your disability benefits. Generally, up to 15% of your benefits can be garnished to pay past due Federal income tax, and the $750 exemption does not apply to past-due taxes. The government can also garnish your disability benefits to pay past-due alimony, child support, or other non-tax debts. Up to 65% of your benefits can be garnished for child support or alimony.


Can My SSI Benefits Be Garnished?

An elderly couple looking at a laptop together.

So, what about Supplemental Security Income (SSI) benefits? Can SSI be garnished? Generally, your SSI benefits are completely safe from garnishment. To qualify for SSI benefits, you must show a substantial financial need. Therefore, the garnishment of these benefits could result in extreme financial hardship. Even if a creditor, like the Federal government, can garnish other types of Social Security benefits, they will be unable to garnish your SSI benefits. This law is in place to help protect the recipients of SSI benefits. Therefore, neither commercial creditors nor the Federal government or Federal agencies can garnish your Supplemental Security Income payments.


Garnishment Of Other Retirement Accounts


The rules about garnishment of retirement accounts are similar to the restrictions on Social Security garnishment, although different laws govern these situations. When the creditor is a commercial creditor, your 401k is generally completely protected from garnishment. The ERISA law protects your 401k from commercial creditors in this case. However, your IRA could be subject to garnishment depending on the balance in your account. The first million dollars in your account is exempt from garnishment per the 2005 BAPCPA law, but any balance over $1 million can be subject to garnishment by commercial creditors.

Again, when it comes to the Federal government, none of your accounts are safe. They have the ability and authority to garnish both a 401k and an IRA. An IRA is more vulnerable, as the government is able to garnish those accounts quite easily. However, a 401k is more protected, even when it comes to the Federal government. If your 401k is established under the ERISA rules, then your account will be safe from garnishment — even for a Federal tax lien. One thing that helps protect your 401k is the fact that your employer is also a part-owner of the account.


The Bottom Line

Your Social Security funds are generally safe from all commercial creditors, although they could be subject to garnishment by the Federal government. This garnishment could take place for past-due taxes, past-due spousal support payments, child support payments, and even Federal student loans. Federal law generally limits the amount of your Social Security check that can be garnished to 15% of your payment amount, with the first $750 being totally protected. However, these limits do not apply to the IRS and the payment of back taxes. If you have specific questions about these rules or feel that your benefits have been improperly garnished, you should contact a local law firm for assistance.


Frequently Asked Questions


Can debt collectors take your Social Security benefits?

Generally, private debt collectors cannot take your Social Security benefits. A commercial creditor cannot garnish your Social Security benefits for repayment of things like credit cards, auto loans, medical bills, or similar items. However, if the creditor is the Federal government, then your Social Security benefits are at risk. The government and other Federal agencies, like the IRS, can garnish Social Security payments for the repayment of past-due taxes, federal student loans, child support, or alimony payments.


How much of my Social Security check can be garnished?

The amount that may be garnished depends on the type of debt that is owed. Commercial creditors cannot garnish any of your Social Security checks. However, the Federal government can generally garnish up to 15% of your Social Security payments. For certain debts, even more of your check can be taken. Up to 65% of your check may be taken for the payment of late child support or alimony payments if those payments are more than 12 weeks behind.


Can I get my Social Security benefits if I am behind on my child support payments?

You will still receive your Social Security benefits, but up to 65% of those benefits might be taken to pay your late child support payments. While Social Security payments are generally exempt from commercial creditors, those benefits can be taken by the government to pay late child support or alimony. If the payments are more than 12 weeks late, the government can take up to 65% of your payment amount to make the back payments.


Can your Social Security benefits be garnished if they are not in a bank account?

Most Social Security recipients today have their benefits placed directly into their bank account via direct deposit. Others choose to have the funds placed on a debit card. The mailing of a physical check is no longer an option today because of how Social Security works. Funds that are placed onto a debit card can still be garnished by the Federal government, even though they are not in a separate bank account. If the funds have been withdrawn as cash, then it will be difficult for the benefits to be garnished. However, as additional deposits are made into your account, those funds will generally be immediately garnished before you can withdraw cash.