Social Security Benefits, Bank Account Levy and Bankruptcy
One of the areas of law that generates a lot of questions to me in the form of emails, blog post comments and phone calls relates to Social Security benefits. Can they be seized by a judgment creditor? by a student loan creditor? are Social Security benefits protected in bankruptcy? Here is my understanding of the law. I will update this page as I consolidate my knowledge. I invite corrections and requests for clarifications from readers, especially my fellow lawyers. This blog post does not, of course, constitute legal advice and you should seek counsel in your jurisdiction for answers to specific questions about your case.
Section 207 of the Social Security Act (42 U.S.C. Section 407) provides as follows:
- The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
- No other provision of law, enacted before, on, or after the date of the enactment of this section may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
- Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986 by the person entitled to such benefit or such person's representative payee.
Garnishment/Levy
I read Section 207 to mean that a judgment creditor (i.e. a credit card lender) cannot seize funds directly from Social Security or from a bank account that came from Social Security payments.
Possible exceptions:
- Child support
- Student Loans
- Past due tax debt
- Overpayment of benefits by Social Security
- Debts owed to other federal agencies
Potential problem areas
- Accounts containing co-mingled funds
- Differences in treatment of Social Security disability and Social Security retirement
- Effect of voluntary transfer of Social Security payments pursuant to a divorce decree
- Difference in treatment of SSDI and SSI payments
Bankruptcy
Bankruptcy "exemptions" cover which assets may be sheltered as part of a bankruptcy filing. The applicable exemption law that applies in your case depends on your current residence, but could relate back to a former residence if you recently moved across state lines. Long-time residents of Georgia will be subject to the exemption law that is contained in the Official Code of Georgia. I read the Georgia exemption statute as sheltering your right to receive future Social Security benefits, and protecting already received benefits to the extent reasonably necessary to provide support and maintenance to the debtor or any dependant of the debtor.
Potential problem areas
- Lump sum Social Security benefits received prior to filing bankruptcy that have been sitting in your bank account (see discussion of Carpenter case)
- Lump sum Social Security benefits (representing past-due payments from prior months) that come into your bankruptcy estate after you file
- Differences in treatment of Social Security disability and Social Security retirement
- Social Security benefits (on-going or already received lump sum) that were voluntarily transferred from the claimant to an ex-spouse or child as part of a divorce settlement
Comments on Social Security Benefits, Bank Account Levy and Bankruptcy
I became totally disabled in September, 2006 and after an almost 2 1/2 year battle with Social Security I was finally approved for disability benefits after appealing my case to a Federal reviewing judge in Boston, Ma. The judge approved my case in December, 2008. In February, 2009 I received my past due benefits and began to receive my SSDI monthly payment.
In mid-February, I was served (well, not exactly served, it was left in my front door) with what I believe is a summons that I am supposed to reply to within 20 days to the plaintiff's (Capital One Bank) attorney and also a copy to the district court. First off, I am not comfortable replying to this piece of paper because I do not agree with all the things that it says such as the amount I supposedly owe on this credit card and also the fact that they (Capital One) want me to agree that I will pay their attorney's fees.
When I left work in September, 2006 until my first check from Social Security came in February, 2009 I had no income and my husband and I have been living to the best of our ability on his Social Security payment.
My question to you is, do you know if this lawyer or the court can levy my Social Security check or my bank account that my Social Security Check is direct deposited to? All of the money that is in this account is money that has been deposited by Social Security and/or SSI. I have received different answers from different people in regards to this matter. I have been told that they cannot levy my SSDI check or my bank account because all of the money in the account are Social Security payments. Somebody else told me that they cannot levy my SSDI check but once Social Security makes my deposit on the 3rd of the month that it is fair game and they can then levy the bank account even though it came from Social Security and it is all the income that I have to live on each month.
I am trying to find out what the correct answer to this is. Is Social Security payments and bank accounts that receive deposits only from Social Security free from liens and levies or are they not safe?
Any information that you could supply would be deeply appreciated. At this point I feel as though I am going to have a nervous breakdown because I am so worried about waking up and finding that they have taken what Social Security money I do have in my account.
Thank you very much for your help.
Can I put my social security checks on hold and not have to declare that as income for filing chapter 7. Then when I am finished with the bankruptcy proceedings start them up again
I have just went through this exact scenario.
The protections from creditors to garnish Social Security (Social Security Act Sect. 207) extend to amounts in accounts into which only Social Security is deposited and verifable as Social Security payments under "normal banking practices" to quote the social security site. However, a creditor can still attempt to garnish the account and if it does, at least here in Ohio you will need to request a hearing to get your money back. Unfortunately too at least my bank will not challenge the order and to boot charges a 75.00 fee for every attempt that occurs.
Hope it helps
my husband passed away and I owe a funeral bill.My son was the co signer.The bill was in illinois and I live and did live in tennessee when my husband died but had him taken home for burial.My insurance did not pay off so I have been left with this burden.They were suppose to send me a payment plan but, never did.They never send me a notice to pay before collection of the debt yhey turned it over to a lawyer and the lawyer never sent me anything to try and collect the debt either He took it straight to small claims court.He sent my son a summons in illinois with my name and my sons name to appear in court.I made a trip to illinois from tennessee so I could appear.When the court called my name and my sons I went forth and then the lawyer told the judge he wanted the court and him to know I was not summons Iwas there because I just wanted to be there.So, they took it to a bench trail.So, I didnot apear.there he got a judgement on my son and he ask the judge if he could add me to that judgement because I did not appear. But he said I was not summons How is that legal?
I have been trying to find the statute of limitations when a bank places a hold on a account that receives only SS and VA disability benefits.
My bank account was overdrawn by more than 1200 dollars about two years ago. Most of the amount was due to overdraft fees. The bank emptied my savings account applying the amount of the overdraft protection fee for such.
However, my student loan was deposited first and this put my account in the black. When I went to withdraw funds for living expenses I was told by the clerk that my account was on hold. I called the bank and spoke to whomever and was told that the manager would be informed and the hold would be lifted.
Three days later my account was still on hold. I called and spoke with the manager. With a humorous response, to my request to have the hold on my account lifted: it was finally activated.
This affected my lively hood and forced me to make a few trips to the pawn shop the obtain living expenses.
Is there a means with which to hold this bank accountable for there actions and attitude?
Thanks, Mark Schmiedeberg 5128788569 San Marcos, TX. 78666
Under the "right to receive Social Security monthly payments", It is my understanding that direct deposits from Social Security must be made to an account solely used to receive such deposits and not comingle other funds in this account. My wife and I both receive direct deposits into our joint bank savings account.
To protect these funds under the "right to receive "provisions from creditors and in bankruptcy, can this account remain joint if no other funds other than social security are deposited or must husband and wife have separate accounts into which to receive these funds?
i was wondering how a bankruptcy court treats social security disability different from social security retirement? thanks for your help.