Can Creditors take my Social Security?
What should I tell Creditors when they call?
I can’t make my monthly payments with the little amount I make…
We understand. It is difficult to live paycheck to paycheck. There is often only enough to cover the essentials, so when Creditors start calling (and keeping calling) it can become overwhelming.
The first thing you should tell them is that you are unable to pay and that you are judgment proof. The good news is your social security income may be protected from creditors. This means they cannot garnish your social security check or the bank account that it sits in – if you protect it correctly.
Protecting Social Security Income:
The relevant law is a section regarding Old Age, Survivor, and Disability benefits, which contains this language:
42 USC §407 (a) In general:
“The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”
In order for this to really work you need to make sure that you preserve the integrity of your Social Security funds, as the creditor will want proof that the funds are exempt. This means that you should never comingle any other money in to that account. The only thing that should be coming in and going out of your bank account is your Social Security. You should also be careful when you are cashing other checks at the bank. It is likely that those checks will be, albeit temporarily, in your account as they run them through the system in order to provide you cash.
Defending Social Security Funds:
In order to make sure that your social security funds are not taken you will need to actively invoke this protection. First, you should have appeared at any Order for a Hearing in Aid in Execution of Judgment. This would have been your opportunity to let the Court and Creditor know that your income is from a protected source.
If a Judgment has been entered; file an affidavit with the court and provide a copy to Creditor as soon as the Judgment is filed. If the Judgment has already been attached to your bank account – do the same – file an affidavit with the court and provide a copy to the Creditor. Your affidavit should state why you believe the funds are exempt and the amount of funds that are exempt. Make sure your affidavit is signed and notarized. The law says that the court should release all funds immediately upon the filing of such affidavit. This can protect your Social Security income up to an amount of three (3) months already in the bank account.
Peace of Mind:
It is possible that you will continue to receive letters from the Creditors. You may still receive phone calls. You may still get sued. Each time you are sued it will be necessary to again provide proof that your only form of income is Social Security.
If you no longer want to deal with the creditors and are looking for peace of mind, we can help. Bankruptcy can stop creditor calls, collection efforts, and discharge most debts and judgments.