Are My Social Security Benefits Protected From Garnishment?

Unfortunately, in these economic times, the elderly are being sued for unpaid credit cards bills and other debt. Many of these lawsuits result in judgments against the elderly debtors. These debtors, having only social security benefits to live on, are concerned that their bank accounts may be garnished and their social security lost to a creditor.

On May 1, 2001, Congress passed an interim rule which protects from garnishment a portion of certain federal benefits that are directly deposited into a judgment debtor's bank account within 60 days of the garnishment being served on the bank. The interim rule deals with financial institutions that freeze a judgment debtor's bank account when served with a garnishment without checking to see whether the account contains exempt federal benefit funds. Garnishment of these funds can leave elderly judgment debtors without income or the means to meet their necessary medical and household expenses.

Under the interim rule, banks, credit unions and other financial institutions must change the way in which they process and respond to garnishments of accounts that hold benefits such as Social Security, Disability, Civil Service Retirement benefits, Federal Employee Retirement Systems, Veterans benefits, Federal Railroad retirement, unemployment and sickness benefits. This new law does not protect from garnishment federal benefits that are not electronically deposited into a judgment debtor's account. These include any deposits made by check, cash, money order or other non-direct deposits.

If you have any questions or would like additional information about how to handle judgments, please call us at (480) 833-1113.