Can Social Security benefits be garnished for debt?

Can Creditors Take Your Social Security?

Can Social Security benefits be garnished for debt?

Most people don’t borrow money with the intention of not paying it back. But sometimes unfortunate circumstances, job loss or illness, can make it difficult to keep up with your previous financial commitments.

Unfortunately, defaulted debts can lead to a host of problems, including credit damage, lawsuits and sometimes even wage garnishment.

But can a creditor take your Social Security if they’re collecting on past-due debts?

The short answer: no

Most creditors and debt collectors cannot seize your Social Security benefits, as long as you receive them via direct deposit to your bank account. If you receive your benefits on a prepaid card, these funds are generally safe as well. This protection applies even if a company sues you, you lose the case and a court enters a judgement against you.

The following benefits are protected from garnishment and bank levies thanks to federal law:

  • Social Security benefits.
  • Supplemental Social Security Income (SSI).
  • Veterans benefits.
  • Federal Employee Retirement System.
  • Civil Service Retirement System.
  • Federal Railroad Retirement, Unemployment, and Sickness Benefits.

When it comes to third-party debt collectors, they cannot even threaten to take your Social Security benefits if they know that’s your only source of income. If a collection agency threatens to take your Social Security income, it may be guilty of violating the Fair Debt Collection Practices Act.

In limited cases, your Social Security income may not be eligible for protection. Additionally, creditors and collection agencies may have other ways to try to collect the money you owe, even if they’re not allowed to take your benefits.

Exceptions to the rule

Your Social Security benefits might be at risk if you owe any of the following:

  • Federal income tax.
  • Federal student loans.
  • Delinquent child support and/or spousal support.

If you receive your benefits via paper check, your Social Security income might be vulnerable as well.

Even under the exceptions above, Supplemental Security Income (SSI) is off-limits for garnishment or a bank levy unless you were overpaid and the Social Security Administration is correcting an error.

Other ways to collect

If Social Security benefits are your only source of income, private creditors and debt collectors have limited options to get their money. They can’t garnish your Social Security income and they can’t levy your bank account as long as it only contains Social Security income that was put there via direct deposit.

But if you owe a substantial amount of debt, companies may not give up easily on attempting to collect. Just because Social Security makes up your only source of income doesn’t mean that creditors and debt collectors don’t have other means to try to recuperate the money you owe them.

Companies may opt to take other actions if they can’t access your Social Security funds to collect a debt. These actions might include:

  1. Reporting negative information to the credit bureaus. Late payments, charge-offs and other derogatory credit information may lower your credit scores. This could make it difficult to qualify for new financing or services in the future.
  2. Selling your account to a collection agency. Collection accounts may result in additional credit damage. Plus, even if your credit scores are still in decent shape, some lenders may require you to pay off outstanding collection accounts before you can qualify for new financing.
  3. Placing a lien on your house or other real property. The company that owns your unpaid debt may sue you in court. If you lose, the creditor could be granted a judgment that can be used to place a lien against your home or other real property. A lien won’t force you to sell your property, but if and when the property is sold, even by your heirs, the lien must be satisfied at the sale.
  4. Seeking a court order to seize non-Social Security funds from your bank account. If your Social Security benefits are in a bank account where other money is held, a creditor or debt collector might use a court judgment to try to get the other money in your account. It would then be up to you to prove that the Social Security benefits in the account cannot be taken. Your bank or credit union is required to protect two months’ worth of benefits (if you receive them via direct deposit).
  5. Seizing your tax refund. Federal and state government agencies may be able to seize your tax refund if you owe an unpaid debt. Once you deposit your tax refund into your bank account, private creditors might be able to take the funds as well, depending on your state of residence.

What to do if you’re dealing with creditors

If you’re in a situation where you have more financial commitments than you have money to pay them, it can be tempting to ignore the problem. After all, you can’t afford the debt. Putting the issue mind may feel a temporary solution.

But ignoring your debt is usually a mistake. Defaulted debts might snowball into a bigger issue, even if your Social Security benefits aren’t at risk. Instead of pretending that your debt problem doesn’t exist, here are some better alternatives to consider.

Actions you can take if you’re in over your head with debt

  • Look at your budget. Many people on fixed incomes are used to managing their money carefully. But even if you’re already using a budget, it’s still wise to take a look at where you’re spending your money each month. You might find areas where you can cut or reduce your spending. Any extra funds you free up can go toward financial goals paying down debt or building an emergency fund.
  • Work with a credit counselor. If you can realistically afford to make some payments on what you owe, you might consider credit counseling. A qualified, nonprofit credit counseling organization can review your financial situation. A credit counselor may be able to set up a debt management plan, or DMP, with your creditors. A DMP consolidates eligible debts you wish to include into a single, monthly payment that is more affordable. Your credit counselor may be also able to reduce your interest rate and get creditors to waive fees as part of the arrangement. Most DMPs take three to five years to complete and may come with setup fees and monthly administration fees from the credit counseling organization.
  • File for bankruptcy protection from your creditors. When you live on a fixed income, budget cuts or credit counseling may not be enough to solve your debt problems. Filing for bankruptcy may help you to protect your assets when you can’t afford to pay your debts. Of course, bankruptcy does come with consequences such as credit damage. It may also be difficult to qualify for certain types of new credit post-bankruptcy. Some debts, past-due taxes and federal student loans, won’t be eligible to include in a bankruptcy filing. For these reasons, bankruptcy is usually a last-resort option.

Next steps

If you can’t afford to pay your debts, your Social Security benefits are probably safe. However, that’s not always the case. Before you decide not to pay a debt, you may want to talk to an attorney about potential consequences you could face.

Featured image by Spectral-Design of Shutterstock.

Learn more:


Can Social Security benefits be garnished for debt?

Can Social Security benefits be garnished for debt?

Social Security promises to provide income to older Americans, but what happens to that income when you have debt? Unfortunately, the answer depends on the kind of debt you owe. Below is an explanation of when debt can lead to social security garnishment and when your payments will be kept safe.

Can ​your retirement and Social Security be garnished?

There are certain debts that cause your Social Security payments to be garnished. These include federal debts federal taxes, federal student loans, child support and alimony, and victim restitution.


However, it’s important to note that each of the above types of debt has its own guidelines for garnishment. Here is what you need to know:

  • If you owe money toward federal taxes, the IRS can garnish up to 15 percent of your monthly benefits to satisfy your outstanding tax bill no matter how much money is in your account.
  • For student loans, up to 15 percent of your benefits can be taken and put towards paying your debt, provided that at least $750 will be left in your account. This rule applies no matter how old the outstanding debt may be. 
  • The guidelines surrounding the garnishment of child support and alimony vary by state, but up to 50 percent of your benefits can be garnished if you support more than one child, 60 percent if you only support one child, and 65 percent if you’re more than 12 weeks behind in payments. 

Can a credit card issuer garnish your Social Security benefits?

Fortunately, the Social Security Administration does not allow your benefits to be garnished in order to settle credit card debt. In fact, your Social Security benefits cannot be garnished to satisfy any debts other than the types listed above, including credit card debt, unsecured and consumer debt personal loans, and medical debt.

That said, there is one caveat that you need to be aware of on this topic. If your Social Security benefits are deposited directly into your bank account, the bank is required by law to automatically protect them from garnishment whenever a creditor attempts to take money from your account.

If, however, you receive a Social Security check and deposit it in the bank yourself, the bank can freeze your account when the creditor tries to take money from it. In that case, you would have to go to court to prove that the money in your account is from your Social Security benefits.

How can I protect my Social Security benefits?

If you’re in debt and you’re worried about having your retirement income garnished, there are things you can do to protect your benefits.

The first step would be to reach out to the organization collecting the debt – either the IRS or the lender – to try and work out a payment plan.

In most cases, the collector will allow you to pay off the debt over time rather than garnish your wages.


If you have a significant amount of debt and you cannot afford all your payments, it may be best to hire an attorney or debt settlement firm to help you. These firms can often negotiate your debts and reach a settlement with your creditors. In some instances, they may even be able to resolve a portion of the debt entirely.

It also may be worth refinancing your debt. There are options to both refinance student loans and mortgages to make the debt you currently possess more manageable to pay off.

As a last resort, you could also consider filing for bankruptcy, but keep in mind that it is not a perfect solution. Many of the debts that can cause your Social Security wage to be garnished – including unpaid taxes and student loans – are also not dischargeable by bankruptcy,

How can you maximize your benefits  

Lastly, there are a few things you can do to maximize your Social Security payments. They’re listed below for your benefit:

  • Delay claiming until age 70: After you reach full retirement age, if you delay claiming your benefits, payments will rise by about 8 percent per year until you reach age 70. Once you hit 70, there is no further benefit.
  • Claim spousal benefits: You can either claim benefits your own work record or you can claim 50 percent of your spouse’s benefit, whichever is higher.  
  • Don’t earn too much in retirement: In 2020, at full retirement age, you can earn up to $48,600 before penalties are taken out. If you earn above that, Social Security will deduct one dollar for every three dollars you earn. 


Can a card issuer garnish Social Security benefits?

Can Social Security benefits be garnished for debt?

Dear Keeping Score,

Essential reads, delivered weekly

Subscribe to get the week’s most important news in your inbox every week.

I have a question regarding my parents’ debts. Both together have $10,000 debt on credit cards and they are receiving supplemental security income (SSI). This is the only income they have. They don’t have any assets and homes. Unfortunately, my mom had a stroke on June 15 and had two complicated major surgeries and she is still in the hospital since June.

The Social Security office stopped my mom’s SSI and my dad cannot afford all the payment. My question is if he stops payment can the creditor garnish his Social Security benefits? Thanks. – Arsineh

Dear Arsineh,

I am sorry to hear about your parents’ troubles. While I don’t know why the Social Security office would have stopped your mom’s SSI after she had her stroke, I do suggest that your dad or her representative get in touch with them and find out why this happened.

No, your Social Security check cannot be garnished for credit card debt. Credit card debt is unsecured debt; Social Security income can be garnished for certain other debts, such as delinquent taxes and federal student loan debt, but not for unsecured debt.

Check out all the answers from our credit card experts.

Ask Steve a question.

For my readers unfamiliar with SSI, the monthly payment amount for the SSI program is based on the federal benefit rate (R). In 2019, the R is $771 per month for individuals and $1,157 for couples. SSI benefits are available to low-income individuals who have either never worked or who haven’t earned enough work credits to qualify for Social Security disability insurance.

I would certainly not suggest that your dad simply stop paying on this debt as a first solution. That may only make a bad situation much, much worse. Since all his income is from Social Security, it is normally protected against claims of creditors. This is known as being judgment proof.

But there are subtleties to be aware of.

While all Social Security benefits are protected from garnishment for credit card debt, the same may not be true for the bank account in which they are deposited.

Here’s why: if your parents’ SSI payments are not direct deposited into their bank account, or if the SSI funds reside in the same account with other savings, they may not be fully protected.

Writing for the legal site Nolo, attorney Patricia Dzikowski says, “A creditor can still have your account frozen by serving the bank with a garnishment or attachment and, if you don’t respond to claim your exemptions, the funds can still be paid over to the creditor.”

If your parents have direct deposit, then the bank must make sure they have access to two months of Social Security benefits. The remainder may then be taken.

See related:  Credit score impact of ignoring card debt while living on Social Security income

Safe from garnishment? You still must tackle card debt

Although the possibility of losing any money is a concern, my bigger worry is the $10,000 in credit card debt. That is a lot of debt for a household receiving SSI.

First and foremost, your parents must stop using credit cards to make purchases. Balances due to outspending your income are carried from month to month with hefty interest charges, and they will snowball as your parents have learned. Going forward they should pay with cash or checks and not plastic unless they use a card that has no balance and can be paid in full each month.

Since their situation is dire, if there was ever a time to plead for a hardship arrangement with their creditors, I would say that now is the time.

For that reason, I would suggest your dad reach out to the credit card companies and see what help they can offer.

If this is done before the account becomes delinquent, his chances of receiving some assistance from the credit card company will be greater.

Creditors have programs set up for customers who fall on hard times and are sincere about doing their best to repay what they owe. You need to know that these programs are generally fairly short-term, in the six months to one year range. During that time, payments and interest rates may be reduced. This may be enough to get him through until your mom recovers.

But it may not. So he needs to be careful about agreeing to something that he may not be able to follow through with. Paying off $10,000 in debt in one year, even at substantially reduced interest rates, would still be in the $900 to $1,200 a month range, and I doubt that your dad has that kind of money available to throw at this debt without help from family or selling some assets.

Before making the call, he should have a good handle on exactly what his monthly expenses are going to be moving forward and how much he could reasonably pay on the debt. Armed with that information, he could call and ask for the hardship department. Once he has been connected to a hardship specialist, he will need to explain the situation in detail.

See related:  I’m disabled and I have $10,000 in card debt. Should I consider debt settlement?

Consider contacting a nonprofit credit counseling firm

One additional word of caution is that if your dad were to enroll in a hardship program with his creditor and then tries to go the debt management plan (DMP) route (see below), it would probably not work out for him. Creditors will only go so far to help their customers.

A better solution might be to contact a nonprofit credit counseling organization. It will help your parents understand all their options and provide them with a spending plan and perhaps a DMP. These plans are designed to pay off debts in five years or less, at substantially reduced interest rates.

The monthly payment on this kind of plan would probably be in the $188 to $210 range. (Check out the handy payoff calculator here to see how this might work.)

To find a qualified credit counselor, I always suggest contacting the National Foundation for Credit Counseling. These are all good people who are trained to find the best solutions to problems just the ones your parents are facing.

The beauty of credit counseling is they will work with your dad to do what I said in the beginning – figure out exactly where he stands with regard to the amount of money that must go out each month. The counselor can make suggestions for finding additional funds through budget cuts or other means. They will also go over all of the options available for taking care of this debt.

He needs to know that there may be other options besides paying or not paying and he will need to know all of those in order to make an informed decision. I wish you all good luck.

Remember to keep track of your score!

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.


Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: