Co-Signing A Loan: Social Security Garnishment

What Is Social Security Garnishment?

While benefits paid to recipients by the Social Security Administration are well protected, there are a few extenuating circumstances. For example, if a Social Security recipient declares bankruptcy, most creditors (vendors, financial institutions, etc.) aren’t permitted to garnish Social Security payments made to a debtor. However, the Internal Revenue Service (IRS) is permitted to do so. The federal government is also permitted to garnish benefits paid from Social Security programs if the recipient owes money for student loans, other federal loan programs (such as housing), or is in arrears for alimony or child support payments. Only recipients of the Social Security Insurance (SSI) program are exempt from this type of garnishment, unless it’s shown that they shouldn’t be receiving these payments at all.

There is no statute of limitations concerning the federal government’s seeking repayments of owed monies. How much of a debtor’s Social Security benefits can be garnished depends on the entity seeking reimbursement? Most of these agencies can seek to garnish up to 15 percent of a recipient’s benefits check per month until the debt is repaid. However, the majority of these agencies are required to adjust garnishment amounts to make sure that debtors have at least $750 remaining in that check. The lone exception who is permitted to take 15 percent per month without guaranteeing a $750 “cushion” is the IRS.

You Don’t Have to Be the Debtor to Have Benefits Garnished

While many Social Security recipients understand that racking up debt may mean a loss of benefits, what they don’t realize is that these rules apply to loan cosigners as well. Cosigners are of course, required to assume any debt that a debtor defaults on. And particularly as the student loan crisis widens, many big hearted Social Security recipients are finding themselves responsible for loans abandoned by children and grandchildren.

How an Attorney Can Help

Is personal bankruptcy or the debt defaults of others eating up your benefits? Are you getting nowhere resolving the matter alone? The right Columbus Ohio bankruptcy attorney can help protect benefits from excessive garnishment in several ways. Many states will protect benefits from garnishment from even federal creditors under certain conditions. A legal firm can use their specialized knowledge to find exemptions to protect funds, or by helping clients to file for formal bankruptcy. Barr, Jones & Associates have been helping clients protect benefits for years from excessive and unreasonable garnishments.

Call today for a consultation to see how Barr, Jones & Associates, LLP can help you.