Can Social Security Benefits Be Taken If You Have Unpaid Debt?

When you’re under financial stress, it’s natural to worry about what might happen next. Take a deep breath—there are clear rules about what creditors can and cannot do. 

When creditors win a judgment, they could ask the court to garnish your wages or property. Garnishment would mean that wages, income, or property are taken from you and given to your creditors. For example, when your wages are garnished, the money is typically taken directly out of your paycheck before you receive it. When your benefits are garnished, that means money is withheld from you. 

Some types of wages and income are up for grabs with garnishment, but even court-ordered judgments have limits. Knowing the rules and what they mean for your finances could help you regain some peace of mind.

Can Social Security benefits be garnished or levied?

Yes, it’s technically possible for your Social Security benefits to be garnished when a court sends the Social Security Administration (SSA) a garnishment order. However, this only happens under very specific circumstances.

When can your Social Security be garnished?

The Social Security Administration could withhold your benefits in certain cases to enforce a legal obligation, including:

• Alimony 

• Child support

• Criminal restitution

If you have certain kinds of tax debt, the IRS could also garnish your benefits—up to 15% of your monthly Social Security payments. For example, if you have overdue federal tax debt, your benefits could be garnished until the tax debt is paid. 

Another government agency—the U.S. Treasury—could withhold Social Security benefits if you owe certain delinquent non-tax debts to federal agencies. Examples of these debts include federal student loans, unpaid fines and penalties, and overpayments for government programs or salaries.

In other words, if you owe money to the government or you owe child support, alimony, or restitution, then you could lose part of your Social Security check. 

Can Private Lenders Garnish Your Social Security Checks?

Short answer: no. When you simply owe money to private creditors or lenders, garnishment of your Social Security benefits isn’t generally an option for your creditors.

Let’s say you have unpaid credit card debt. Your credit card company can't ask the Social Security Administration to take your benefits.

Creditors have other methods they could use to try to collect from you. For example, they could ask a court for an order to garnish wages or levy your bank accounts. They could ask a court to put a lien on your property. But your directly deposited Social Security is pretty safe. 

The key to making sure your federal benefits are protected is to use direct deposit. When your benefits are directly deposited into your account or onto a prepaid card, they’re protected by federal law. Banks must automatically protect up to two months' worth of benefits from being seized. 

You can sign up anytime to have federal benefits direct deposited to your bank account or loaded onto a prepaid card. 

How to Find Debt Relief

If you’re at risk of having wages or assets garnished or levied, take action. Look for some methods to resolve your debt. 

Several options exist for debt relief, such as: 

• Debt consolidation. You combine several balances into a new loan, potentially with a lower interest rate that could save you money. You streamline your finances and hopefully reduce your monthly payment.  

• Debt settlement. You negotiate with your creditors to accept less than you owe. The rest of your debt is forgiven but could result in a higher tax bill. You can also have an experienced debt settlement firm negotiate on your behalf. 

You don't have to wait for the court to order your bank account or wages to be seized—you have the power to explore the solutions to find one that fits. If you’re struggling, you could try to arrange a better plan with your creditors. 

If you’re in over your head and worried about garnishment, it just makes good sense to take some action. Not sure where to start? Contact Freedom Debt Relief today to speak to one of our experienced Debt Experts.