[fanyfrany]

Can a recovery service for a credit card company garnish Social Security Disability check for previous unpaid debt? :confused:

[Fr_Chuck]

Moved to legal section please watch the section you post in

[JudyKayTee]

Can a recovery service for a credit card company garnish Social Security Disability check for previous unpaid debt? :confused:

No, SS is exempt (except for child support and most student loans). Once the check is deposited in the bank, however, the account can be liened and frozen until you can prove the source of the funds and that can take some time.

[mr.yet]

Send the following to the debt collector and give to your bank the following:

For your information about Social Security Benefits


Safe from Garnishment



Federal law makes Social Security benefits exempt from levy, garnishment, and assignment- 42 USC 407(a) states. "In general the right of any future payments under this sub chapter SHALL NOT be Transferable or assignable. AND NONE of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levey, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law".

This means that even if a creditor or debt attorney, collection agency has a judgement against you they CAN NOT garnish your SS payments nor can they take the money from you after it has been paid to you; for example, the portion of your bank account that is attributable to your SS benefits is EXEMPT from LEVY OR ATTACHMENT

[JudyKayTee]

Send the following to the debt collector and give to your bank the following:

For your information about Social Security Benefits


Safe from Garnishment



Federal law makes Social Security benefits exempt from levy, garnishment, and assignment- 42 USC 407(a) states. "In general the right of any future payments under this sub chapter SHALL NOT be Transferable or assignable. AND NONE of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levey, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law".

This means that even if a creditor or debt attorney, collection agency has a judgement against you they CAN NOT garnish your SS payments nor can they take the money from you after it has been paid to you; for example, the portion of your bank account that is attributable to your SS benefits is EXEMPT from LEVY OR ATTACHMENT

This does not work in NY - you must use a form and it takes time. You also cannot send the info to the bank in advance of the levy/freeze.

[mr.yet]

BACKGROUND
Debt Collection Improvement Act
In Fiscal Year (FY) 1995, the Social Security Administration (SSA) electronically
deposited 53.5 percent of the total number of OASDI and SSI payments. In April 1996, Congress passed the Debt Collection Improvement Act (DCIA),3 which requires that most Federal payments, except tax refunds, be made electronically as of January 1999.4 In FY 1999, SSA electronically deposited 71 percent of the total OASDI and SSI payments. Each year since FY 1999, SSA has continued to increase its reliance on direct deposit as a method for issuing payments. As of December 2007, SSA had electronically deposited 81.4 percent of the total OASDI and SSI payments. A

1 The OASDI program, established under Title II of the Social Security Act (Act), § 201 et seq. 42 United
States Code (U.S.C.) § 401 et seq. provides benefits to wage earners and their families in the event the
wage earner retires, becomes disabled or dies. OASDI benefits are paid from the Social Security OASDI
Trust Funds.
to the SSI program, established under Title XVI of the Act, § 1601 et seq. 42 U.S.C. § 1381 et seq
provides benefits to financially needy individuals who are aged, blind and/or disabled. SSI payments are
financed from general tax revenues.
3 Public Law (P.L.) 104–134; Title III, Chapter 10, Sec. 31001; codified at 31 U.S.C. § 3701 et seq.
4 31 U.S.C. §3332(f).

FIs Deducting Fees and Garnishments from Social Security Benefits (A-15-08-28031) 2

breakdown of direct deposit usage by program shows that 84.8 percent of OASDI payments were electronically deposited, whereas the total for SSI payments was 58.8 percent.

The Social Security Act
The Act5 protects the beneficiary's right to receive Social Security benefits (OASDI and SSI) directly and to use them as he/she sees fit.6 Specifically, Section 207(a) of the Act (42 U.S.C. §407(a)) states:

The right of any person to any future payment under this title shall not
be transferable or assignable,7 at law or in equity, and none of the
monies 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.
However, there are five exceptions related to Social Security benefits.

1. Section 459 of the Act (42 U.S.C. §659) allows Social Security benefits to be
garnished8 to enforce child support9 and/or alimony10 obligations.11

5 Section 207 of the Act, 42 U.S.C. §407 (applicable to Title XVI benefits pursuant to section 1631(d)(1) of
the Act, 42 U.S.C. §1383(d)(1)).
6 SSA currently recommends to beneficiaries that if a garnishment is issued against their account, the beneficiary should assert this statute as a defense, unless one of the five exceptions apply. See item 2 in “Potential Safeguards to Protect Social Security Recipients,” page 10. Additionally, Federal courts have allowed Social Security benefits to be subject to a garnishment order in some instances.

7 SSA, Program Operations Manual System (POMS) GN 02410.001(B)(1), Assignment is the transfer of the right to, or payment of, benefits to a party other than the beneficiary.
8 POMS, GN 02410.001(B)(4), Garnishment is a legal process by which benefits are taken to pay a beneficiary's child support and/or alimony obligation to a third party.
9 POMS, GN 02410.200 (D), Child support is periodic payment of funds for the support and maintenance of a child(ren) subject to, and in accordance with, State or local law.
10 POMS, GN 02410.200 (E), Alimony is periodic payment of funds for the support and maintenance of a spouse or former spouse subject to, and in accordance with, State or local law. It includes, but is not limited to, separate maintenance and spousal support.

11 By the enactment of section 459 of the Act, the United States Government consented to income
withholding for enforcement of child support and alimony obligations from certain moneys owed by the United States and the District of Columbia. The implementing regulations to this section, 5 C.F.R. § 581.101, et seq. provide that benefits subject to these types of garnishment include title II benefits, but not title XVI benefits. See 5 C.F.R. § 581.103(c)(1) and § 581.104(j). To initiate the process for SSA to withhold part of a Social Security benefit payment for either child support or alimony, the appropriate court order must be served on the person designated by SSA to accept service and process the court order.

FIs Deducting Fees and Garnishments from Social Security Benefits (A-15-08-28031) 3
2. Section 6334 (c) of the Internal Revenue Code (26 U.S.C. §6334 (c)) allows
benefits to be levied12 to collect unpaid Federal taxes.
3. Section 3402 (p) of the Internal Revenue Code (26 U.S.C. §3402(p)) allows
beneficiaries to elect to have a percentage of their benefits withheld and paid to
the Internal Revenue Service to satisfy their Federal income tax liability for the
current year.
4. The DCIA allows benefits to be withheld and paid to another Federal agency to pay a non-tax debt the beneficiary owes to that agency.13
5. The Tax Payer Relief Act of 1997 (Public Law 105-34; Title X, Subtitle C, Section1024), (26 U.S.C. § 6331(h)) authorizes the Internal Revenue Service to collect beneficiaries' overdue Federal tax debts by levying up to 15 percent of each monthly payment until the debt is paid.
Generally, SSA's interpretation of its responsibility for protecting benefits against legal process14 and assignment ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of the Act as long as they are identifiable. For example, only Social Security benefits are deposited into a particular bank account.





Financial Institutions' Garnishment of Social Security Benefits
SSA recommends, “If a creditor tries to garnish your social security check, inform them
that unless one of the five exceptions apply, your benefits can not be garnished. You also may want to provide this same information to your financial institution and seek legal assistance if you believe it is needed.”15
Several newspaper articles have described how FIs have frozen and assessed fees on bank accounts into which Social Security benefits were electronically deposited. An article in the April 28, 2007 issue of the Wall Street Journal cited several cases nationwide where Social Security beneficiaries received their benefits through direct deposit and had their bank accounts garnished by debt collectors. The article further stated that, in these instances, the Social Security beneficiaries did not know their benefits were exempt from garnishment or how to assert the exemption.

12 POMS, GN 02410.001(B)(3), Levy is a type of legal process for the seizure of benefits for payment of
unpaid Federal taxes.
13 31 U.S.C. §3716.
14 POMS, GN 02410.001(B)(2), Legal process is the means by which a court (or agency or official
authorized by law) compels compliance with its demand; generally, it is a court order.
15 http://mwww.ba.ssa.gov/deposit/DDFAQ898.htm.
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