Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: If you retired with debt, you might be wondering if your pensions can be taken by debt collectors. Here is SoloSuit's guide to wage garnishment, pensions, and your rights as a consumer.

Ahh, retirement. Many of us imagine reclining on nice, sandy beaches with Hawaiian shirts, holding a fruity little drink with a paper umbrella in it while relaxing and enjoying time off. Retirement is a beautiful goal and aim to have; you performed years of service leading up to a retirement where you can rest easy knowing that your earned benefits, such as your pension, are owed to you and cannot be taken from you.

However, a scary reality is that if you face extensive debts and obligations, your pension can be garnished by collectors to satisfy any standing debts you have. Regardless of their retirement status, individuals with large debts are commonly approached by creditors to settle these obligations. If these debts are not repaid on time, creditors may opt to take you to court to collect these unpaid debts.

Thankfully, for the most part, pensions are protected from creditors or debt collectors in the same way that social security benefits are. However, your debt collectors may be able to acquire some of your pension income through other collection methods that do not involve directly accessing your pension.

When can debt collectors pursue my assets?

Debt collectors have the right to take you to court if large unpaid debts are owed. If your account is in collections, and if collectors are successful, a court order can be used against you to recover this owed money.

If a creditor or debt collector files a lawsuit against you, make sure you take immediate action to preserve your rights. SoloSuit can help you file an Answer and guide you through fighting debt collectors in the courtroom. Debt collectors can confiscate your bank account, garnish your earnings, and sell your non-exempt property and assets.

If the debt collectors get a court order to garnish your bank account, the pension placed in your bank account may not be safeguarded if it does not meet the Employee Retirement Income Security Act of 1974's provisions (ERISA). Essentially, these provisions require that if pensions would like to be protected, they must meet a certain standard regulated by this statute.

Employee Retirement Income Security Act of 1974

While most company pensions comply with ERISA, some private pensions, such as IRAs and Roth IRAs, do not. Once these pensions are put into a bank account, they may be in danger.

In addition to the safeguards provided by ERISA, each state establishes its own limits on the amount of money that is shielded from creditors. Under this protection, creditors and courts are not permitted to take funds directly from your pension plan. Your personal pension plan will not be accessible to creditors or the courts for any reason.

Under the ERISA, your pension funds are safe in that account, but you should be aware of specific instances in which creditors or courts may be able to obtain some of your pension funds.

When can my pension be garnished?

When might a creditor or a court order a garnishment of your wages or pension? Essentially, your pension account is its own separate protected entity. Creditors and authorities cannot access your personal account to take your retirement funds. Money in your individual bank account, on the other hand, is a different story. Pension capital that has been deposited into your account may be taken away. In other words, your pension can't be garnished before it's given to you, but it can be garnished after you've received it.

Although pensions are theoretically a type of income, your retirement funds are legally protected. Your pension funds are intended to assist you in paying your bills and purchasing whatever else you may require to live comfortably. If your pension funds are not included in this category, a court may decide that your extra pension funds can be used to pay off obligations.

State laws vary on wage garnishment

Different states have varying laws for wage garnishment practices and the extent that personal assets can be seized. Understanding the risks and benefits of allowing debts to go unpaid and what actions a creditor can take against you to force payments can help you make wise financial decisions.

Respond to a debt collection lawsuit

Despite the fact that debt collectors normally have a difficult time seizing your pension, you should be prepared to deal with them and arm yourself with the knowledge and resources to protect your assets.

Every year, ten million people in the United States are sued for debt. Because they can't figure out how to reply and only have up to 35 days to do so, 90% of them lose by default.

The first step to winning a debt collection lawsuit is to respond with a written Answer using these three steps:

Answer each claim listed in the Complaint document: The first and most important section of your Answer should focus on responding to the claims listed in the Complaint document. You can admit, deny, or deny due to a lack of knowledge. Most attorneys recommend denying as many claims as possible.
Assert your affirmative defenses: An affirmative defense is any legal reason that a debt collector's case is invalid. A common affirmative defense to mention in a debt lawsuit case is the statute of limitations on debt. If the statute of limitations on a debt has passed, the debt collector cannot sue you for the debt. There are several other affirmative defenses you can bring up to strengthen your side of the case.
File the Answer with the court, and send a copy to the party suing you: After you've drafted your Answer, you should file it within the court's deadline. The deadline to respond to a debt lawsuit is anywhere from 14-35 days, depending on which state you live in. Make a copy of the Answer and send it, via USPS certified mail, to the attorneys representing the debt collector or creditor suing you.

Here's where SoloSuit can help!

To learn more about these three steps, check out this video:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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