Can Social Security Disability Be Garnished?
Many are wondering, can social security disability be garnished? There are two primary sources of disability income: Supplementary Security Income (SSI) and Social Security Disability Insurance (SSDI). SSI is a form of public welfare benefit for disabled individuals who don’t have enough financial resources to support their daily needs such as food and shelter. A disabled individual is entitled to SSI even if he/she doesn’t have a sufficient work history. SSDI on the other hand is a form of government insurance to assist those in need. A disabled individual who applies for SSDI will only be able to receive benefits if he/she has sufficient work history and has paid enough to the social security system.
Can Social Security Disability be Garnished?
An income from SSI can never be garnished in any circumstance since it is only granted to disabled individuals who are deserving and who are really not capable of paying for their daily basic needs. The only time SSI can be taken back by the government is if they find out that a disabled individual isn’t entitled to it. SSDI benefits on the other hand can be garnished but only in rare occasions and only by certain institutions. Generally, creditors and debt collectors are not allowed to garnish one’s social security disability benefits whether it is SSI or SSDI. The disability income is exempt from creditors although SSDI is subject to some exceptions.
Who is Allowed to Garnish Social Security Disability?
Financial creditors and banks are not allowed to touch your social security benefits but if you wonder can Social Security Disability be garnished, the federal government can garnish these beneifts if you owe them money. The federal government can garnish your social security disability benefits as a payment for several types of debts such as:
- Federal student loans
- Federal income taxes
- Alimony and child support
- Federal home loans
- Non-tax debt that is owed to other federal agencies
- Certain civil penalties
If you owe money because of a student loan, it doesn’t matter if it has been years since you were in school. The government can take money from your SSDI to repay your long forgotten student loans.
Can a Creditor Garnish Disability Income from a Bank Account?
So who can Social Security Disability be garnished? Creditors can garnish wages if an individual owes money and aside from wages, they can also levy funds from bank accounts to satisfy debts. To be able to do so, creditors would need a court order which they can present to the bank. The bank grants access to a debted individual’s bank account to retrieve funds. Creditors however are not allowed to touch funds that come from social security disability benefits. In 2011, a federal law was passed which requires banks to review bank accounts before allowing garnishment to ensure that the funds are not protected social security disability funds. Banks need to mark SSI and SSDI funds as off-limits to creditors. To protect SSI and SSDI benefits, make sure that the disability funds are deposited electronically by the SSA into your bank account. It’s easier for the bank to protect these disability funds from garnishment.
How much can the Government Take?
The IRS has the strongest suit among all the government creditors that are allowed to take part of your social security benefits. The IRS can take 15% of social security disability benefits as payment for delinquent taxes through the Federal Payment Levy Program. The IRS can take the 15% cut no matter the amount of social security disability benefit that you have. You are given 30 days to make payment arrangements before the IRS takes a percentage of your monthly disability benefits once it sends its final notice of an intent to levy. For student loan debts, the federal government can take up to 15% of your disability benefits as long as the remaining balance of your monthly disability benefit will not be lower than $750.
For non-tax debts owed to other federal government agencies, they are not allowed to garnish the first $750 of your monthly disability benefit. The National Court Ordered Garnishment System is responsible for processing alimony cases and delinquent child support. The amount of garnishment depends on the state you live in.