Can Social Security Take Money Out of Your Bank Account?

If you owe money to Social Security for benefits to which you were not entitled, remember that Social Security is a federal agency that can use a variety of legal avenues to recoup its assets. This includes garnishment of monthly benefits as well as your wages, so it's always best to settle the dispute before the agency takes these steps. Bank accounts, in most situations, are safe from garnishment.

You may have a dispute with Social Security over the payment of retirement or disability benefits. Most often, this happens when Social Security makes an error in its calculation of the amount of your monthly payment, and determines that it has made an overpayment. In other cases, the agency may have discovered income or assets that you did not disclose, and which would decrease the amount of SSI benefits to which you are entitled. You will receive a notice from Social Security when this happens, with the agency's own calculation of the overpayment and the amount that you owe.

If you receive notice of an overpayment, you have 60 days to file an appeal, known as a Request for Reconsideration. This appeal sends the case back to an adjudicator, who will review the calculations and make a second determination. If this also goes against you, you may file a Request for Hearing, which allows you to argue the case in front of a Social Security judge. Social Security can take no action against you until the appeals process has been exhausted.

A Request for Waiver is another alternative, in which you argue that you are unable to reimburse the overpayment or that doing so would cause undue hardship.

Read More: How to Lose Social Security Benefits

If you are unable to win an appeal, or work out a payment plan with Social Security, the agency will begin reducing your monthly benefits. If you are on SSI, the agency can take up to 10 percent of your monthly income. If you are on disability, your monthly check can be stopped altogether. If this proves insufficient, Social Security will request garnishment of your federal tax refund, and finally any wages you earn, after providing you with a 60-day notice that it intends to do so.

Federal law now prevents the seizure of Social Security benefits from bank accounts. In addition, Social Security itself does not have the authority to order bank garnishments. However, if you are the subject of a fraud investigation, this may lead to criminal charges and a court judgment that you owe the agency money. A court judgment can be enforced by an order of garnishment, which a bank is legally obligated to carry out.

It is always your best course to negotiate any disputes with Social Security. If you don't, Social Security will demand full reimbursement and has the legal authority to force repayment.

When it comes to creditors, the Social Security benefits you have in your bank account are protected to an extent. NOLO points out that benefits that are not directly deposited into your bank account or benefits that have been transferred to another account may be at risk. You'll need to prove to the judge that the funds are indeed from your Social Security Benefits.

It's also important to note that there are exceptions for past-due child support and federal taxes. If a bank receives a garnishment order from the court for either of these two exceptions, they can freeze your account.

Read More: Types of Garnishments in Order of Priority