Garnishment of SSDI by Creditors
Social Security Lawyers in Chicago
It can be challenging to obtain Social Security Disability Insurance (SSDI) benefits if you become disabled, and these benefits may not be significant enough to fully depend upon to live. Additionally, you may be concerned about whether creditors can garnish your SSDI benefits. Generally, creditors can’t garnish SSDI benefits, but there are some noteworthy exceptions. It is important to discuss your particular situation and whether these exceptions apply with a Chicago Social Security attorney.
Garnishment of SSDI by Creditors
There are certain situations in which your disability benefits can be garnished. For example, if you owe federal taxes, your SSDI benefits may be garnished to recover these sums. Similarly, if you received a student loan guaranteed by the federal government and default on loan payments, your SSDI could be garnished. However, Supplemental Security Income (SSI) cannot be garnished for unpaid taxes or student loans.
There are limits on how much of your payment can be garnished to pay tax or student loan debt. Generally, the IRS can’t take more than 15% of a monthly Social Security benefit to pay off federal income tax arrearage. This 15% can withheld until the tax debt is paid off. The IRS will give you a notice prior to the levy, and you can ask for a hearing or propose a payment plan. Similarly, for a defaulted student loan guaranteed by the government, the greatest proportion of SSDI benefits that can be garnished is 15%, but this garnishment shouldn’t leave you with less than $750 in monthly benefits.
Child Support and Alimony
SSDI payments can also be garnished to pay child support or alimony, as well as court-ordered restitution to the victim of a crime. For example, if you are convicted of aggravated battery, you may be ordered to pay restitution to the victim. If you don’t pay the required restitution, it’s possible that your SSDI can be garnished to pay the debt.
The federal Consumer Credit Protection Act allows 50% of SSDI benefits to be garnished for the purposes of child support or alimony if you’re supporting a spouse or child separate from the court order, and a maximum of 60% of your benefits otherwise. If you are 12 or more weeks in arrears, another 5% can be garnished.
SSDI benefits are protected with regard to consumer debts such as medical debt, credit card debt, and car loans. Under federal law, creditors of these types of debts are prevented from getting any of your SSDI funds, though they can garnish your wages or bank account. SSI benefit payments can’t be garnished at all to repay private debt.
Limits to Garnishing
Banks are required to review accounts before garnishing the money in them in order to figure out whether SSDI funds were deposited. After benefits have been paid, the federal government can’t protect them. However, these funds can stay protected if you can keep them identified as protected funds. A controversy can arise if a creditor gets a court order to garnish funds in a bank account, and the bank account includes a combination of both SSDI benefits and other income. It is wise to keep a separate bank account only for the deposit of SSDI benefits in order to make sure they’re protected from creditors. In some cases, it may be appropriate to file papers with the court to state that your disability income is protected from creditors, and a dedicated Social Security lawyer can help.
If you think that your SSDI benefits are being improperly garnished, you will need to challenge the governmental body to whom you owe money. For example, if your SSDI is being garnished to address federal tax arrearages, you’ll need to challenge the matter with the IRS.
Consult an Experienced SSDI Attorney in Chicago
If you’re concerned about garnishment of SSDI by creditors in Chicago, you can call our firm for a consultation. At Katz, Friedman, Eisenstein, Johnson, Bareck & Bertuca, our seasoned SSDI lawyers represent those disabled in Quincy, Aurora, Champaign, and Rockford, along with Kane, Sangamon, Adams, Winnebago, and Cook Counties. Contact us at 312-724-5846 or via our online form.