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Can A Debt Collector Garnish My Social Security?

“Can a debt collector take my Social Security from my bank account?” or “Can a creditor garnish my Social Security?” are questions that many consumers have asked. The general answer is “no”.

Debt collectors and creditors usually violate the Fair Debt Collection Practices Act and/or the Florida Consumer Collection Practices Act if they even threaten to “take” or garnish Social Security funds. If a debt collector is threatening to take your Social Security money, fight back!

A federal law (codified at 42 U.S.C. Section 407) exempts Social Security funds from creditors. This protection under federal law applies regardless of which state a person lives in.

Sallie Mae (etc.) can still garnish Social Security arising from defaulted educational loans guaranteed by the federal government. So could debt collectors collecting on behalf of Sallie Mae.

Other than recoupment of federally insured educational loans, a person’s right to receive future Social Security payments can not be impaired by creditors.

Congress recently Congress required people under ninety years of age (with limited exceptions) to receive their Social Security funds through either direct deposit or a debit card.

A problem arose because debt collectors were garnishing consumers’ bank accounts which contained social security funds. The banks which held the funds allowed the garnishments of Social Security funds although they knew that the monies were exempt. The banks argued that they were simply honoring the courts’ garnishment orders and did not have an obligation to object to the garnishment on the account holders’ behalf. Finally, the bank regulators stepped in before Congress had to.

On May 1, 2011, a Treasury Department regulation protecting the money that Social Security recipients receive for a period of two (2) months after the funds are received took effect. This regulation also protects other federal benefits including Supplemental Security Income (“SSI”), Veterans Administration (“VA”) benefits held in bank accounts related to direct deposits or prepaid benefit cards.

Depository banks are responsible for assuring that they do not impound these exempt Social Security and other federal benefits funds if they receive a garnishment order or other judgment.

In the past banks have taken a hands off approach to assisting Social Security recipients leaving many of them stuck with massive banking fees and overall more destitute than they were.

Congress failed to include a private right of action in the recent legislation so it is unlikely that consumers could sue the


for violating the new statute. Complaints to the banking regulators are probably going to be needed unless the banks quickly improve their enforcement efforts.

The Fair Debt Collection Practices Act (“FDCPA”) prohibits debt collectors from threatening to take any action that cannot legally be taken or that is not intended to be taken. Debt collectors who threaten to garnish Social Security usually violate this provision. The Florida Consumer Collection Practices Act (“FCCPA”) prohibit original creditors as well as debt collectors from making such threats.

Consumers have also described how debt collectors falsely threatened to “take” their home or seize other funds that are protected under Florida law. For example, Florida’s constitution protects most owner occupied homes from foreclosure by anyone other than the mortgage company, HOA/Condo Association or the I.R.S. Florida law also protects many (but not all) forms of retirement income and assets.

If you receive Social Security and a debt collector is threatening to garnish or take it, you are welcome to contact me by completing the Collection Agency Harassment Form in the right hand column of this page. If you are a Florida resident, you are also welcome to call my assistant. I will contact you to discuss your situation and how to protect your rights.

If you live outside Florida, I will try (as a courtesy to you) to provide you with the name and contact information of an experienced FDCPA lawyer who is licensed to practice law in your state.

(C) 2011 Donald E Petersen
All rights reserved

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{ 6 comments… add one }
  • Mr. D. April 7, 2012, 3:17 PM

    My bank account in *** with *** Bank is soley funded by social security benefits. No commingling of any kind. Over this weekend I found out that a garnishment had been placed on it for [almost $ 1,000] which now cause my rent check to bounce. There was currently only $600 dollars in the account. Another creditor had done this about a year ago and I had to “school” the bank about the laws governing social security benefits which are the only source of income in my account.

  • John June 19, 2012, 12:08 PM

    Hi; CACH in California through their attorneys times their bank levy within a month of so of gaining Social Security benefits. Clever for sure. Is this collusion to leap frog the restrictions on seizing Social Security Funds? Many thanks.

  • N West July 4, 2012, 12:43 PM

    I owe about 800.00 from a previous hospital bill before medicaid was in place. The bill was sent to an attorney’s office for collection All my funds are from social security disability. I get direct deposit from Social Security. Can I be assured that that funds are protected? Article 227 says ALL funds are exempt from levy, garnishment or other legal process. Can my checking account and savings which is minimal also be protected?

    • Don Petersen November 28, 2012, 6:20 PM

      N West – You would need to consult with a lawyer who practices law in the state you reside in. Exemptions from collection are mostly dependent upon state law and state rules of civil procedure. The type of debt may also place any judgment arising from the debt in a “special” category. Each person’s situation is different. Every state’s law is different in important respects. I highly recommend that readers who have specific questions about their situation consult with a consumer rights lawyer who practices in their state.

  • Michael September 10, 2012, 6:30 PM

    Ive recently recieved a letter claiming a judgement has been made to garnesh my wages. Im currently on SS do to a work related injury & I’m from ***. What steps should i take from here?

    • Don Petersen December 3, 2012, 1:26 PM

      Michael – Exemptions from collection often depend upon state law. Although federal law exempts social security from garnishments arising from “most” types of debts, state procedural requirements that consumers need to follow in order to actually prevent garnishments vary widely. Consumers who are being threatened with garnishment should consult with an experienced FDCPA / consumer debt defense lawyer who practices in their local courts.

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