It may be a consequence of becoming disabled—getting behind and late on bills. After a time, you may begin getting calls from debt collectors and collection agencies demanding payment. When you explain that you are on disability, their next comment maybe, “we can garnish your disability check.”
Creditors and debt collectors have been known to make a wide range of dubious and outright untrue statements just to get people to find a way to pay up. However, if you’re on disability, “finding extra money” may be more difficult.But statements like these from debt collectors and agencies are intended to bully and frighten you into paying up at all costs. Don’t be intimidated by a debt collector who says this to you.
Disability Income Is Protected
Federal law protects Social Security disability benefits, whether SSDI (Social Security Disability Insurance) or SSI (Supplemental Security Income) from creditors.For any collector, must file a lawsuit first, then obtain a judgment for the amount owed. With this judgment, the collector can then go to your bank to obtain payment. If you receive disability income, the bank is not allowed to turn over any monies from that form of payment.Missouri does not regulate debt collection agencies. However, all collection agencies must comply with the federal Fair Debt Collection Practices Act.
Exceptions
Disability can be garnished for certain federal debts. If you owe:
- Back taxes, in which the IRS can take no more than 15% of your monthly SS benefit
- Federal or state-backed student loans that are overdue or in default, also 15%
- Child support, up to 50%
- Other funds owed to the federal government.
SSDI can be “garnished” to cover these expenses, but can’t leave you with less than $750 per month. SSI, which is awarded to low-income individuals, is exempt from these debts.
Illegal Garnishments
Debt collectors are not above committing dishonest and unlawful acts to get their money, even when they know they can’t take your disability money from you. Because they’re dishonest, they’ll attempt it anyway, and some successfully. That doesn’t mean you have to let them.Prior to a creditor taking any money, your bank or other financial institution is required to ensure that debt collectors do not take any Social Security payments. These rules also apply if you receive your benefits on a prepaid debit card, such as Direct Express.Your financial institution is required by law to protect and freeze two months of disability payments for your own use. Anything above that amount is available to creditors. For instance, if your monthly disability check is $1,200, your bank must protect $2,400, or two months of payments. A creditor can access anything above that $2,400 threshold.However, if you deposit other monies into the same account, such as a spouse’s or child’s wages, collectors can access and take that money. Chances are they will take all that they can get. If this happens, you will likely have to go to court to get the money back. Notify the judge in your case that some or all of the money taken is exempt because it is from Social Security.
Protect Your Disability Payments
Write your bank a letter indicating that the monies in your account are from Social Security, and are exempt from debt collectors. Include your name, address, account number, and contact information. Either hand-deliver this letter to your local bank branch or send it certified, return receipt requested.Additionally, consider having a separate bank account solely for your disability payments to avoid any commingling of funds, and ensure the protection of your disability monies. Be aware that if you transfer any money out of the disability account into another account, it may become unprotected once it is comingled with other funds.
Get Help From Popham Law
The Popham Law Firm has helped hundreds of people in all kinds of disability cases. We’ll be happy to review your case, let you know if you have one, and how to proceed. Contact us today at (844) 243-2288 or (use our online contact form) to get started. The call is free, and so is the consultation, with no obligation.
