Can debt collectors take your Social Security? What is protected and what isn’t

Social Security payments are generally “exempt from execution, levy, attachment, garnishment, or other legal process, or from the operation of any bankruptcy or insolvency law,” states the SSA. However, there are exceptions.

Certain benefits can be withheld due to a beneficiary’s legal obligation to pay child support, alimony, or restitution and to pay a delinquent tax debt. Generally, your benefits that deposited in your bank account may not be fully safe either despite federal protections. Here’s a look.

When creditors can access Social Security funds in your bank account

While private creditors cannot directly garnish your Social Security benefits to recoup an outstanding debt on your credit card, medical bills, or personal loans, they may try another tactic that could affect the Social Security money you receive. They may try to levy your bank account where the funds are deposited.

There are federal protections to ensure that an amount equal to two months’ worth of your benefit must remain in your bank account, and some states provide stronger protections. However, any amount above that threshold deposited in your account could be at risk in the event a creditor has obtained a court judgment in their favor.

When Social Security benefits can be withheld and which ones

The SSA is allowed to withhold “current and continuing Social Security payments” to enforce a beneficiary’s legal obligation to pay child support, alimony, or restitution under Section 459 of the Social Security Act. “By law, we do not make retroactive adjustments,” says the SSA. Between 50% and 65% of your benefits could be withheld.

Social Security beneficiaries who are in default on their federal student loans could also have their benefits garnished, including while in retirement. The amount is up to 15% of your benefits but your monthly payment cannot fall below $750.

Section 1024 of the Tax Payer Relief Act of 1997 grants the Internal Revenue Service the ability to levy 15% of benefits to pay delinquent tax debt through the Federal Payment Levy Program (FPLP). In this case, there is no minimum benefit floor that must be preserved.

But the IRS says that “the FPLP excludes certain delinquent taxpayers who receive social security payments if their income falls at or below certain established levels, based on the Department of Health and Human Services poverty guidelines.”

Additionally, “the Department of Treasury can collect delinquent non-tax debts owed to other federal agencies under the Debt Collection Improvement Act of 1996.”

“If you disagree with the garnishment [to pay child support, alimony, or restitution], contact an attorney or representative where the court issued the order, not Social Security,” advises the SSA.

If you wish to appeal an IRS levy you should contact the tax agency at 1-800-829-7650 to discuss any rights you may have. You can have your questions answered about any levy for a non-tax debt by contacting Treasury at 1-800-304-3107.

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