When individuals become temporarily or permanently disabled, they may be eligible to receive Social Security disability payments. The two Social Security disability entitlements are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Each entitlement has its own rules for eligibility and whether a creditor may garnish payments. Generally, creditors cannot garnish payments from either entitlement. However, exceptions exist for SSDI.
Garnishment
Creditors typically garnish wages to recover debts owed once a borrower defaults. There are two types of garnishment. Bank account garnishment occurs when a creditor obtains a court order to freeze a bank account until the debtor pays the debt owed. Wage garnishment that would apply to Social Security disability payments occurs when a creditor seeks to have the court order a debtor's employer to allow the creditor to intercept portions of the debtor's wages. Most creditors (except the IRS and some other federal agencies) must obtain an order from the court to garnish a debtor's wages.
Social Security
Social Security is a social welfare and insurance entitlement funded by payroll taxes. All individuals who are employed pay dedicated payroll taxes or FICA taxes. In addition, employers pay additional payroll taxes for these benefits. The program is referred to typically on paystubs as the Old-Age, Survivors and Disability Insurance Program (or OASDI). These taxes help fund disability insurance for people who become temporarily or permanently disabled and cannot work.
SSDI
The SSDI program provides disability payments to individuals who have worked for a certain period of time and paid their OASDI taxed while they worked. Therefore, the eligibility requirements are based on whether the individual is considered "disabled" under federal regulations and whether they meet certain prior work requirements. However, the IRS, custodial parents owed child support, and other federal agencies are exempt from this rule and can therefore garnish SSDI payments.
SSI
SSI is different from SSDI. SSI eligibility depends on whether the applicant meets the definition for disability under federal regulations and if she meets certain low-income requirements. SSI is based on a person's disability and their financial need. SSI payments cannot be garnished. There are no exceptions to this rule. Not even the IRS can garnish SSI payments.
Warning
Please contact a qualified attorney to find out how the facts of your situation apply to Social Security disability benefits.
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