Are you behind on your debts? If so, you may be wondering if debt collectors can take your private disability payments
The answer is maybe. It depends on what type of income and assets you have.
If you are being sued for a debt, you may be wondering if your wages can be garnished. If you receive disability benefits or Supplemental Security Income from Social Security, you may be worried that your only source of income could be garnished. However, only private disability payments can be garnished – social security and disability benefits are protected. So if you’re receiving private disability payments, they could be subject to wage garnishment.
If you receive “exempt” benefits, it is important to be aware that some issues can arise if these benefits are mixed with other forms of income. You should take the time to educate yourself on these potential problems and how to avoid them, in order to ensure that your private disability payments are protected.
Collect Debts With Garnishment

If a creditor or debt collector sues you and you lose, the creditor will get a judgment against you. This gives the creditor the right to garnish your wages or take money out of your bank account to pay the debt. Each state has different rules about how much money can be taken and what types of accounts can be garnished.
If you owe money to someone and they take legal action to get the money from you, one way they may try to collect is through wage garnishment. This means they would contact your employer and ask them to withhold a certain amount of your paycheck each pay period until the debt is paid off.
Federal Restrictions

Although Social Security and disability benefits are typically exempt from garnishment or bank levy, there are some exceptions. In some states, private disability checks may be subject to garnishment. Whether or not your benefits are protected varies from state to state. So it’s important to check the laws in your specific state before assuming your benefits will be safe from creditors.
The Consumer Credit Protection Act limits the amount of money that can be garnished from a person’s wages. The maximum amount that can be garnished is 25 percent of a person’s disposable earnings or the amount by which a person’s earnings exceed 30 times the minimum wage, whichever is less.
Exceptions to the federal restrictions on garnishment
When it comes to debt, there are many different types of creditors. There are specific exceptions when it comes to garnishment, and this is in relation to child support collection agencies and the federal government. If you owe money to the IRS, your Social Security disability payments can be garnished.
There is a limit of 15 percent on tax garnishments for student loans. Other government creditors, with the exception of the IRS, are not allowed to touch the first $750 of a monthly disability benefit.
Social Security Income may be able to help
Disabled individuals who are struggling to make ends meet may be eligible for Supplemental Security Income (SSI). This program provides monthly benefits to those who qualify, which as of 2015, is $733. To be eligible for SSI, applicants must have limited income and assets. Additionally, federal law protects SSI benefits from garnishment.
Debt Collectors May Attempt to Collect from Your Bank Account

If you are being sued for an unpaid debt and lose the case, the court may order a bank levy against you. This is similar to wage garnishment, but instead of taking money from your wages, money is taken from your bank account to pay the debt.
Other Funds That Are Not Subject to Bank Levies
There are certain payments that are protected from bank levies according to federal law. These include:
- Social Security benefits
- Federal veterans benefits
- Supplemental Security Income payments
- Child support
- Alimony payments
- Unemployment compensation
- Welfare benefits
You must tell your bank the source of any exempted funds if you want to keep them safe from creditors. If you mix these funds with other non-exempt money, the bank is not required to identify the exempt funds and can seize them to pay a judgment. You may not find out until after the seizure has occurred.
Protections for Retirement Accounts
While all other accounts may be subject to a bank levy, your retirement account is protected. This is because it falls under the Federal Employee Retirement Income Security Act, which protects the assets in these types of accounts. Employers usually set up these accounts, so as a beneficiary, you cannot lose your right to the assets.
If you are being sued by a debt collector, or have a judgment against you, your wages and bank accounts may be garnished. However, there are certain assets that the law protects from seizure. Knowing your rights can help you keep your property safe.
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