How to Stop Social Security Wage Garnishment

Legal Expert
Sarah Edwards, BS

Sarah Harris is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

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 owe money to a creditor and receive Social Security benefits, you may wonder if the creditor can garnish your benefits. The short answer is no, but this guide will help you understand how social security income is protected from wage garnishment. If you’ve been sued for debt, you can prevent wage garnishment in the first place through debt settlement.

Most U.S. adults have some form of debt on which they make monthly payments, like an auto loan or credit card. You probably won’t hear from creditors if you're steadily making your payments. But if you stop making them, it’s a different story.

When people don’t pay back the money they owe, creditors don’t let it slide. If you owe money to a creditor, you’ll probably receive frequent calls and letters urging you to get back on track with your payments. It’s easy to ignore such communications when you’re in a tough financial spot and don’t have the money to repay your debt.

However, ignoring a creditor won’t make your debt go away. Instead, the creditor might sue you or sell your debt to a collections agency — which might sue you once it assumes the debt. If you lose a debt lawsuit, your creditor will win a judgment, which it can use to garnish your wages or freeze your bank account.

If your primary source of income is Social Security or Social Security Disability Insurance (SSDI), you can’t afford to lose your money to wage garnishment. Fortunately, laws protect your Social Security benefits in some cases.

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No one can garnish your Social Security for consumer debts

Federal law prohibits creditors or debt collectors from garnishing your Social Security benefits for consumer debts, like credit cards, auto loans, and mortgages. If your only source of income is Social Security, you don’t need to worry about losing part of your benefits to this type of creditor.

However, it's a different story if you owe unpaid child support, alimony, or taxes.

Under 42 U.S.C. 659, the court can order garnishment of your Social Security benefits until you pay overdue child support or alimony. Per 15 U.S.C. 1673, the federal wage garnishment limits for unpaid child support and alimony are:

50% if the beneficiary has another spouse or child they’re supporting other than the ex-spouse or child owed money.
60% for a beneficiary who doesn’t have another spouse or child.
An additional 5% of pay for debtors over 12 weeks behind in child support.

According to Public Law 105-30, known as the Taxpayer Relief Act of 1997, the IRS may withhold up to 15% of your Social Security benefits for back taxes.

Consumer lenders who know that your primary source of income is Social Security can try a different tactic: freezing your bank account. However, according to the Consumer Financial Protection Bureau (CFPB), your bank protects up to two months of Social Security benefits from garnishment as long as your benefits are on direct deposit.

Banks must leave the value of two months’ worth of benefits in your account for you to use. If you have money in your account exceeding the two-month limit or you aren’t paid by direct deposit, your creditor could take money from your bank account.

Let’s consider an example of how wage garnishment works with social security income.

Example: Jill is a 70-year-old retiree who relies solely on her Social Security benefits for income. Unfortunately, Jill took out a credit card with Huntington Bank five years ago for $4,000 and stopped making payments when she retired. Her limited income makes paying for items other than rent and groceries difficult. Huntington Bank decided to sue her for the $4,000 and won a judgment. Now, it wants to garnish her income. Since Jill has no income besides Social Security, it can’t garnish her benefits. Each month, the government deposits her benefits into her bank account. She has two months' worth of benefits in the account. When Huntington Bank asks her bank to freeze her money, it can’t because Jill’s account balance doesn’t exceed two months of her Social Security benefits. Jill avoids the garnishment, but Huntington Bank may resume its efforts if Jill decides to go back to work or saves more money in her account.

Is a creditor suing you for unpaid debt, but your sole income is Social Security? Settle the obligation with SoloSettle’s assistance.

Prevent wage garnishment through debt settlement

Repaying the debt is the ideal solution. When you repay a debt to a creditor, you don’t need to worry about a lawsuit anymore. Your creditor will drop the case against you and report your debt paid to the credit bureaus. You won’t need to fear wage garnishment or any other legal ramifications concerning the debt anymore.

However, you might not have the money to repay your debt in the short time before your court date. If that’s the case, you’ll need to consider debt settlement. In a debt settlement, you offer your creditor a percentage of the obligation’s value. In exchange, it agrees to release you from the remainder of the debt and drop the claim.

Debt settlement benefits everyone. You’ll save money and avoid a judgment and potential wage garnishment. Your creditor will receive most of what you owe, and it won’t need to go through any more legal hoops.

Want to learn more about the debt settlement process? Check out SoloSuit’s helpful video that describes the process:

SoloSettle, powered by SoloSuit, makes the debt settlement process easier. Our software helps you send and receive settlement offers until you reach an agreement with your creditor. Then, we help you document the agreement and transfer your settlement payment for you, keeping your financial information safe from debt collectors.

Protect your Social Security by communicating with your creditors

Even though consumer creditors can’t garnish your Social Security benefits, that doesn’t mean they won’t try other avenues. Most retirees have other forms of income, like money from a 401(k) or pension. Federal law does not protect voluntary retirement income from wage garnishment.

Similarly, individuals receiving SSDI may have other sources of income unprotected from garnishment.

If you have a creditor (literally or figuratively) knocking on your door, it’s always best to address the issue head-on. Even if creditors can’t garnish your Social Security for consumer debt, they may gain access to money you have from other sources.

You’ll know a creditor is suing you when you receive a Court Summons and Complaint. The Complaint will list the reasons for the lawsuit, including the amount you owe and any information about your account, like your last payment date.

You’ll respond to the creditor’s Complaint with an Answer. An Answer is a formal reply that outlines your defenses. If you properly file your Answer, the creditor can’t ask the judge for a default judgment. Instead, you’ll argue your side of the story in front of the court.

Not sure where to start with your Answer? Watch SoloSuit’s video for six tips on drafting an Answer:

Next, you’ll want to use the time before your court date to repay or settle the debt. Repaying the debt is ideal and will stop any further legal process.

However, if you don’t have the money to repay the debt, you can try to settle it instead. In a settlement, you pay a fraction of the amount you owe in a one-time payment. If your creditor agrees to your settlement terms, it will drop the lawsuit and release you from any remaining amount you owe.

No one can garnish your Social Security benefits for consumer debt

While you won’t need to worry about creditors garnishing your Social Security benefits for consumer debt, they can still access other income. If you have financial assets that exceed two months of your Social Security benefits, you’ll want to protect them. Try to settle the debt before a creditor accesses your savings or voluntary retirement plan.

Are you worried about losing part of your retirement income to a creditor? SoloSettle can help you settle the debt today.

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