A lot of people go into debt after becoming disabled and waiting on their Social Security benefits. But what about after you receive disability benefits? Many people get tens of thousands of dollars in back-pay or past due benefits eventually.
Can legitimate creditors seize your Social Security payments to collect on past due debts?
Generally, no, they cannot. But there are some exceptions:
Creditors may go to court and collect Social Security funds to pay for:
Tax debt
Child Support
Federal Student Loans
Other past due debts to the US government, including certain federally guaranteed loans, etc.
Some debts that cannot seize your Social Security money include: credit cards, car loans, rent, most conventional home mortgages, bank loans, insurance payments, payday loans, consumer loans, etc.
One Piece of Advice for Handling Your Social Security Money:
It's best to deposit your Social Security benefits into a dedicated account that receives nothing but Social Security money. This adds great protection against creditors who may try to seize money from your account to pay off a debt.
Have one account at your bank or credit union where all your Social Security payments go, but nothing else is deposited there. No other money of any type goes into that account. Don't place other retirement money, rent receipts, spouse's payroll, or any other money into that account--just Social Security money. That way, if a creditor does manage to seize money from that account, you can easily prove that the money that was seized WAS Social Security money. That will be a great advantage in trying to get your money back.
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This post is for informational purposes only and is not mean to be legal advise or counsel. For any legal problem, you should contact an attorney with expertise in such matters.
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