SSI Status Credit Card Debt & Government Regulation Laws

Supplemental Security Income (SSI) provides cash benefits to low-income disabled and elderly people who have few or no assets. Because SSI income is protected by federal law from garnishment and seizure, credit card companies can have a difficult time collecting on an SSI recipient's debt.

Collection Activity

Credit card companies have the right to attempt to collect a debt owed by someone on SSI. Collection activity usually involves contacting a debtor repeatedly through the mail or by telephone. Creditors and collection agencies can also file a lawsuit, provided that the debt is still within the statute of limitations. Each state sets its own statute of limitations for credit card debt, which typically gives a creditor anywhere from 3-6 years in which they can go to court to collect a debt. People on SSI, like any other debtors, are protected by both state and federal fair collection practices laws. Collection agencies cannot threaten, abuse, or harass debtors, nor can they call at inconvenient times or places. Debtors can also request, in writing, that a collection agency end its collection efforts. After the request is made, the collection agency can only contact a debtor one more time to let her know if they plan to file a lawsuit or return her case to the original creditor.

Court Judgment

If a credit card company or collection agency cannot persuade a debtor to pay his debts voluntarily, it can take the debtor to court. Once the creditor wins a court judgment, it can use one of several tactics permitted by state law to collect the judgment. Some of these tactics include asset seizure, wage and bank account garnishment, and property liens. Because people on SSI typically do not have a lot of assets and don't earn very much, if anything, it can be difficult for a creditor to successfully collect on a judgment. State laws often exempt certain amounts of property and assets from seizure or garnishment anyway, so unless the SSI recipient owns a house on which a lien can be filed, it is unlikely that a creditor will be able to get much from the SSI recipient. However, there is no law that prevents a creditor from trying to collect a judgment from an SSI recipient.

Garnishment

SSI income cannot be garnished, nor can funds from SSI that are in a bank account be garnished or seized. State law usually requires that an SSI recipient take the initiative and inform the court, and the creditor, that money in an account is from SSI in order to prevent its garnishment.