If you are one of the millions of people who rely on government benefits
to make ends meet, money is probably tight. If you owe money on an old
debt or closed account, you may be worried that the creditor will garnish
your benefits to pay off your debt. Since losing even part of your benefits
could be a recipe for financial disaster, you need to know: Can a creditor
garnish your government benefits?
In general, the answer is no. When a creditor is owed a debt, the creditor
will first have to file and win a lawsuit against the debtor, or the person
who owes the debt. After that, the creditor can request a writ of wage
garnishment. These writs are then sent to the debtor’s employer,
and the money is taken out of his or her paycheck. The creditor may also
attempt to garnish money being held in a bank account.
When a person is unemployed, disabled, or retired, he or she will not have
any wages to garnish. In most cases, any other sources of income that
the debtor receives are not eligible for garnishment. Both state and federal
law recognize that some types of benefits should not be garnished, especially
those benefits which are the only source of income for people who are
retired, injured, or disabled.
For example, Social Security benefits for disabled or retired persons cannot
be garnished, and neither can veteran’s benefits. Additionally,
unemployment benefits and workers’ compensation benefits are also
protected. Finally, retirement benefits, pensions, life insurance proceeds,
401(k) plans, earned income tax credits, and college or medical savings
accounts are all ineligible for garnishment.
While most creditors cannot reach any of these accounts, there are some
exceptions to this rule. People who owe back taxes, child support payments,
or alimony payments may have their benefits garnished by the state and/or
federal governments. However, the average creditor seeking payment for
a debt cannot reach these sources of income.
In some instances, creditors may wrongly seize income or assets that come
from these protected sources. For instance, a creditor may have the right
to take money from a person’s bank account to satisfy a debt. However,
if the money in the account comes from Social Security benefits or another
protected source, then that creditor will have to return the money. In
some instances, a person’s bank may have an obligation to protect
some income, like money from Social Security, from being seized by a creditor.
It is not uncommon for creditors to freeze or take money that should have
been protected by state and federal law. If this happened to you, you
need experienced legal help to remove the garnishment and get your money back.
At Loan Lawyers, our South Florida debt defense attorneys will review your
claim for free, and will help you understand your options. If you are
struggling because of a wrongful garnishment order, don’t wait to
get help. Schedule your complimentary and confidential consultation today
by calling (888) FIGHT-13 (344-4813).