Social Security: when can your benefits be garnished due to an unpaid debt?


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Because Social Security income is intended to serve as a financial safety net for retirees and other qualified Americans, most benefits are exempt from garnishment, levies, seizures, and other legal proceedings. However, there are a few exceptions.

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According to the Social Security Administration social security manual, if you have unpaid federal taxes, the IRS may withhold your Social Security benefits. Your benefits can also be garnished to recover child support and/or unpaid alimony. In addition, social security benefits may be garnished in response to court-ordered restitution to victims.

Your benefits may also be reduced or offset to collect outstanding debts owed to other federal agencies, such as student loans owed to the US Department of Education.

Garnishments apply to retirement, spousal and survivor benefits and Social Security Disability Insurance (SSDI) payments. Supplemental Security Income (SSI) payments cannot be garnished or withdrawn.

One thing to keep in mind is that there are limits on the amount of your Social Security payment that can be garnished, according to AARP. If your federal income taxes are late, for example, the IRS cannot deduct more than 15% of your monthly Social Security benefits.

In terms of alimony or court-ordered alimony: The Consumer Credit Protection Act (CCPA) allows up to 50% of your benefits to be garnished if you support a spouse or child. a child other than the subject of the court order, and up to 60%% if you are not. An additional 5% can be entered if you are 12 weeks or more late.

As AARP noted, Social Security garnishments to pay off defaulted federal student loans have been on hold for most borrowers since March 2020. As part of the Fresh Debt Relief Initiative Start of the Ministry of Education, this will remain the case until one year after the end of the federal reimbursement. pause. As the pause is set to end on December 31, 2022, garnishments for student loan collections will not resume until at least December 31, 2023.

When student loan garnishments resume, up to 15% of your Social Security benefits may be withheld to pay off student debt. However, garnishment for student loans in default cannot leave you with less than $750 in benefits per month.

Social Security benefits are protected for private debts such as medical bills, auto loans, and credit card bills. In these cases, creditors can get a court order to garnish money from your paychecks or bank accounts, but federal law prevents them from garnishing Social Security benefits.

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If you think your benefits are being entered in error, Social Security can’t help you, according to AARP. To dispute garnishments, you’ll need to go to the government agency that says you owe the money, such as the IRS or the state court that oversees your child support.

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