Can creditors seize your social security benefits?
Problem
I defaulted on a credit card back in 2010. I lost my job due to prolonged illness in that
year. This is why I was not able to make any payments on the card. I am practically living
on Social Security benefits from that time. I am better now and planning to get back to
work in this year. The credit card issuer contacted me numerous times regarding the bill
payment when I was ill. When they didn't receive any money even after making several
calls to me, they assigned the account to a collection agency. I got to know about that
when the collection agency called me last week. They told me that I need to pay $1500 to
them immediately. I explained to them that at present I am disabled and living on Social
Security benefits.
After hearing my explanation, they told me that I can get rid of the debt by paying
$550 within this week. When I told them that it is not possible for me to make any
payments until the first week of the next month, the collection agency made a payment
arrangement. As per the arrangement, I need to pay $80 for around 7 months. They asked
can they seize my social security benefits?
Solution
First of all Social Security or government benefits can't be garnished or seized by the
collection agencies. So, you don't have worry about your Social Security benefits right
now. Earlier, banks could freeze consumers' accounts for a certain period of time after
receiving garnishment order. It was consumer's responsibility to specify the funds that
are exempted from garnishment. However, post 1st May 2011, banks are required by the
federal laws to monitor the money that is directly deposited by the federal government in
a consumer's account. So, if the bank receives a garnishment order from the court, then
they have to find out the amount of money that can't be garnished. However, this law will
only be applicable if your disability benefit amount is deposited electronically to your
account.
If you are surviving only on your disability benefits, then the collection agencies will
not go for garnishment. However, the collection agency may try to extract that money
illegally.
You have done the right thing by not revealing your financial details to the collection
agency. You may stop taking up their calls. You can just hung up the phone or tell them
to contact you via mail. Find out the address of the collection agency and send a Cease
and Desist letter via certified mail to them.
Finally, try to determine whether or not you can repay the bill. Plan a budget to curtail
unnecessary expenditures and save money. Allocate the saved money towards the
payment of debts. You can also consult the top debt consolidators regarding this matter.
This may help you reduce your debt. Take care of your health so that you can get back to
working life again. The sooner you get back to normal life, the better.
Questions and Answers
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