Social Security Asset Seizure: Learn the Regulations and Protect Your Entitlements
Social Security benefits, a crucial source of income for many Americans, are generally protected from commercial creditors under federal law. However, there are specific circumstances where these benefits can be garnished.
If you mix your Social Security benefits with other income in the same bank account, it could potentially jeopardize the protection of your benefits. It's advisable to open a separate bank account to receive your Social Security benefits to avoid confusion about the origin of the funds.
The Internal Revenue Service (IRS) is one of the federal agencies that can garnish Social Security benefits. The IRS can garnish up to 15% of monthly Social Security retirement or disability benefits through the Federal Payment Levy Program (FPLP) to collect unpaid federal debts like federal income taxes, defaulted federal student loans, or court-ordered victim restitution. The IRS must send notices and offer a chance for hearings before garnishment. Supplemental Security Income (SSI) is exempt from IRS levy, and the IRS must leave the individual with a minimum amount after garnishment, typically at least $750 per month, to protect low-income recipients.
The Social Security Administration (SSA) enforces garnishments for child support and alimony under court orders. This garnishment can be between 50% and 65% of benefits, depending on the situation, and unlike IRS levies, there is no minimum $750 protection for garnishments related to child support or alimony.
Federal student loans that are in default may also trigger garnishment up to 15% of Social Security benefits via federal agencies, similar to IRS levies for other debts.
State child support enforcement agencies can garnish up to 60% (and up to 65% if more than 12 weeks behind) of Social Security benefits to satisfy court-ordered child support obligations. Similarly, if a court orders you to pay restitution to a crime victim, your Social Security benefits can be garnished to fulfill this obligation.
It's important to note that regular consumer debts generally do not allow garnishment of Social Security benefits. The U.S. Department of Education can garnish up to 15% of your benefits if you default on federal student loans, but this is an exception to the rule.
If you receive a garnishment notice, responding promptly and/or seeking legal advice to understand your rights and potential redress is recommended. If you have questions about garnishment or believe your benefits are being improperly garnished, consulting with a qualified attorney is advised.
The U.S. Department of the Treasury uses Direct Express Debit Mastercard to distribute federal benefits to recipients who don't have access to a bank account, providing an additional layer of protection for these benefits.
In summary, the IRS can garnish Social Security benefits for unpaid federal taxes, defaulted federal student loans, and other federal debts, subject to limits and protections. The SSA enforces garnishments for child support and alimony under court orders, with higher possible garnishment rates and fewer protections for the beneficiary. Regular consumer debts generally do not allow garnishment of Social Security benefits.
[1] Social Security Administration. (n.d.). Garnishment of Social Security benefits. Retrieved from https://www.ssa.gov/pubs/EN-05-10086.pdf [2] Internal Revenue Service. (n.d.). Federal Payment Levy Program: Frequently Asked Questions. Retrieved from https://www.irs.gov/businesses/enforcement-collection/federal-payment-levy-program-frequently-asked-questions [3] Consumer Financial Protection Bureau. (2018, February 13). Protecting your Social Security benefits from garnishment. Retrieved from https://www.consumerfinance.gov/ask-cfpb/protecting-my-social-security-benefits-from-garnishment-en-1688/ [4] National Consumer Law Center. (2018, February 13). Protecting Social Security Benefits from Garnishment. Retrieved from https://www.nclc.org/issues/protecting-social-security-benefits-from-garnishment.html [5] National Consumer Law Center. (2016, March 15). Protecting Social Security Benefits from Garnishment: What Consumers Need to Know. Retrieved from https://www.nclc.org/images/pdf/old/income/protecting-social-security-benefits-from-garnishment-what-consumers-need-to-know.pdf
In personal-finance matters, it's vital to keep Social Security benefits segregated from other funds to maintain their protection. Mixing them with other income in the same account could potentially jeopardize their safety.
Under specific circumstances, the Internal Revenue Service (IRS) can garnish Social Security benefits to collect unpaid federal debts, given that certain limits and protections apply.
