The Social Security Act, found under Title 42 Section 407 of the United States Code, protects Social Security income – intended as a safety net for retirees – from virtually all creditors. Social Security income is generally protected from non-government creditors looking to levy bank accounts. The federal government may still garnish Social Security, however, if you owe back taxes or other governmental debts; you may also lose Social Security to student loan lenders and those to whom you owe domestic support obligations.
Garnishment of Social Security Payments
The United States government does not allow a creditor with a judgment against you to garnish your Social Security check the way it could garnish your paycheck if you were working. With very few exceptions, the government will send you your Social Security payment intact. What happens to it after that is less certain.
Garnishment of Bank Accounts
The Social Security Administration no longer mails out paper checks to residents of some states. Many Social Security recipients elect to receive their funds by direct deposit into their bank accounts instead.
In January 2009, the United States government enacted the Exempt Income Protection Act to provide some protection to the funds after they hit your account. If your bank account contains Social Security income, a creditor with a judgment against you can’t freeze it, up to a balance of $2,500. Funds over $2,500 are not exempt.
In May 2011, a second federal regulation took effect protecting Social Security funds from garnishment for up to two months after you receive them. Not only can your creditors not garnish your payments before you receive them, but you would have to save the money in a steadily-increasing account for it to become vulnerable.
Exceptions to Garnishment Rules
Social Security benefits are not protected from every creditor. Although the federal government protects your Social Security checks from garnishment by creditors with judgments against you, it doesn’t protect you from itself. If you owe past-due taxes, the Federal Payment Levy Program can levy your checks up to 15 percent to collect that money.
Student loans backed by the federal government are also exempt from the law against garnishment of Social Security payments. If you owe court-ordered child support, alimony or other domestic support obligations, your Social Security benefits may also be garnished to repay them.
Tips for Facing Judgements
If a creditor has a judgment against you and you’re concerned about possible seizure of your income, you have options. Don’t let the balance in your bank account exceed $2,500. If you’re living on your Social Security and using it to pay your monthly bills, this isn’t likely to occur. Unfortunately, banking institutions have ultimate responsibility for enforcing these federal laws as of the date of publication.
A creditor can attempt to freeze your bank account in violation of the law and it’s up to your bank to prohibit them from doing so. If the bank allows it, you have very little recourse against them. The law does not allow you to sue them for negligence. If it happens, contact your state’s consumer protection department and report the creditor. Speak with an attorney, if you can afford it.
Although the bank might not be liable, the creditor has broken the law. Depending on where you live, it might also be possible for you to receive a United States government debit card for your Social Security benefits and bypass a bank account completely.
- Consumer Financial Protection Bureau: Can a Debt Collector take my Social Security or VA Benefits?
- AARP: Can Social Security Payments be Garnished?
- E-Verify.gov. "What is E-Verify." Accessed March 11, 2020.
- Social Security Administration. "Social Security Numbers: Social Security Number Chronology." Accessed March 11, 2020.
- FAFSA.edu.gov. "Information on the Privacy Act, use and disclosure of Social Security Numbers." Accessed March 11, 2020.
- Social Security Administration. "Social Security Numbers for Noncitizens," Page 1. Accessed March 11, 2020.
- Social Security Administration. "The Story of the Social Security Number." Accessed March 11, 2020.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.