People who take out of credit cards must sign a legal agreement that obligates them to pay back any money they draw against the line of credit within a certain amount of time. Like any other debt, this credit card contract is legally enforceable, and credit card companies may take a number of actions to secure payment of the debt. A person's pension may or may not be garnishable, depending on state law.
Garnishment
A garnishment can only be legally accomplished if a creditor sues a debtor in civil court, is awarded damages for an unpaid debt and the judge orders the debtor's wage garnishment. Garnishment made by a private company, including a credit card company, under any other circumstances is illegal. In addition, many pensions cannot be legally garnished, including nearly all public pensions and many private pensions.
Public Pensions
All federal benefits, including Social Security benefits and disability benefits, are protected from garnishment by private creditors under federal law. However, pensions issued by local governments are not protected by federal law, only state law. State laws vary in regard to whether these public pensions are exempt, but most states don't allow them to be seized. So, for example, a police officer receiving a pension from a city would likely be exempt from garnishment for credit card debts.
State Laws Regarding Private Pensions
Private pensions -- those issued by businesses and other nongovernmental organizations -- are not protected to the same degree public pensions are. Like public pensions, the garnishment of these pensions is determined by state law. Generally, however, private pensions are less often exempt. To determine rules regarding the garnishment of these pensions, a debtor should consult his local secretary of state or attorney general's office.
Account Seizure
Even if a private pension cannot legally be garnished, this does not mean creditors may not be able to seize money another way. Some states that do not allow these pensions to be garnished do allow them to be seized through the freezing and forcible seizure of assets in a person's bank account. So, if the pension is deposited in a bank account, it may taken out under a judge's orders.
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