Can Anyone Garnish My Disability Check?

Government agencies such as the Social Security Administration and the Veteran's Administration issue disability checks each month. Recipients usually receive the checks through direct deposit in checking accounts at banks or credit unions. In general, federal law protects the checks from garnishment unless a government agency such as the Internal Revenue Service is garnishing the account. However, there are also loopholes that allow other debt collectors to garnish disability checks.

Considerations

The Social Security Administration reports that it is possible to stop a non-government debt collector from garnishing disability checks. But the agency places that burden on the disability income recipient. Social Security and other government agencies do not cooperate directly with debt collectors, meaning they will not send payments directly to debt collectors. However, the agencies have no control over disability checks after direct deposit into bank accounts.

Process

Garnishment begins with authorization from a judge in civil court. A judge may grant a debt collector the right to garnish a debtor's bank account because of a delinquent credit card bill or some other debt. The debt collector must first file a lawsuit and receive a monetary judgment after the judge rules in favor of the debt collector. After that, the debt collector can request garnishment of the debtor's checking or savings account. The debt collector sends the garnishment order to the debtor's bank, and by law, the bank must comply with the request, which gives the debt collector access to all the money in the account.

Responsibility

Banks realize that disability payments are exempt from garnishment, but they are caught in the middle. The law requires them to comply with garnishment orders, and in most instances they can't determine if the money in a customer's account is exempt from garnishment. For example, a bank customer may receive a direct deposit of a disability check, spend or withdraw that money, and add other money to the account, which the debt collector would have access to. The possible co-mingling of funds makes it difficult for a bank to determine the presence of exempted funds such as a disability check.

Solutions

People seeking to protect disability payments from garnishment should open checking or savings accounts just for their disability check and deposit no other money into the account. Then they should notify the bank in writing that the account holds funds only from disability checks and the bank should not allow release of the money through garnishment except for the IRS or similar government agencies. The Social Security Administration reports that checks it issues are protected from garnishment by the Section 207 of the Social Security Act. Disability check recipients should also consult with a consumer affairs attorney if they fear garnishment. The attorney can write the debt collectors letters warning them against garnishing disability funds.