Creditors may try to attack wages, pensions and Social Security benefits to regain money lost as a result of a loan default. Officers of the court may look to garnishment as an enforcement tool for a child or spousal support order. The Internal Revenue Service may implement garnishment proceedings to make a taxpayer current with an outstanding tax debt. Pensions are fair game for all creditors pursuing garnishment as a means of collection. However, those who go after Social Security benefits may find the request denied.
Garnishing Social Security Benefits
Section 207 of the Social Security Act prohibits garnishment of Social Security benefits for repayment of debts such as credit cards, automobile loans, personal loans or a mortgage. Social Security benefits can be garnished for domestic support obligations, federal taxes, non-tax debt owed to a federal agency other than the IRS and civil penalties levied under the Mandatory Victim Restitution Act.
Garnishing Pensions
According to the U.S. Department of Labor, pensions are treated just like wages when it comes to garnishment, which makes them accessible by creditors, bankruptcy courts, federal and state authorities and officers of the court charged with collecting domestic support obligations.
Bankruptcy Protection From Garnishment
If a debtor files for protection under the Bankruptcy Code, the court orders an automatic stay of most collection actions, including garnishments. The stay does not apply to domestic support obligations, whether from a pension or a Social Security benefit check.
Considerations
Title III of the Consumer Credit Protection Act limits garnishment of pension benefits to 25 percent of a pensioner's disposable earnings. The rules change, however, with regard to child support. The court may take up to 50 percent of disposable earnings of Social Security benefits if the person being garnished is supporting a spouse or children, 60 percent if not, and it may up either percentage option by 5 percent if support payments are over 12 weeks in arrears.
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