Unemployment benefits are reserved exclusively for individuals who have recently lost their jobs and are trying to find other employment. These benefits are designed to provide them with temporary financial support while they seek other employment. However, sometimes people receiving benefits will find themselves deep in debt. In most cases, creditors won't be allowed to seize these benefits, even if they've received a judgment from a court awarding them damages for the debt.
Debt Collection
Commonly, a creditor who is owed money by a borrower will cease notifying the debtor of his obligation to pay back the debt and simply sue the individual in civil court for breaking the contract that he agreed to when he took out the debt. If the collector wins, he will be awarded what is known as a legal judgment, which entitled him to the amount of money specified by the judge.
Legal Judgment
A legal judgment is much like a regular debt. For both a regular debt and a legal judgment, the debtor is legally required to pay the full amount to the creditor. However, a creditor has more options in regard to the collection of a legal judgment. In many cases, the creditor is allowed to garnish the person's wages or even remove money directly from his bank account.
Unemployment Benefits
Unemployment benefits are a form of income, although they are not provided for the performance of a specific task. This means that they cannot be counted as wages. Under federal law, most types of government benefits, including unemployment benefits, cannot be forcible seized by private creditors through garnishment or other means, even if the creditor has received a legal judgment from a civil court.
Exception
The only exception to the federal law is if the creditor is a government agency. The federal law that prohibits seizure of money stemming from a civil judgment applies only to private creditors. In many cases, a government agency that has earned a civil judgment against a debtor will be able to take money from a person's account even if this money comes from unemployment benefits, or garnish these benefits.
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