For years, debt collectors have hounded individuals for payments on old debts, and in many cases, utilized a legal process called garnishment to seize money from an individual's bank account. Once a debt collector has a court order to garnish an individual's bank account, the collector simply asks the individual's bank to freeze the account and send the amount necessary to satisfy the old debt to the collector, rather than the account holder.
In some cases, older individuals who have been the target of collection or garnishment actions are receiving Social Security or disability benefits. Federal law protects these benefits from garnishment. But often Social Security recipients did not know about the law or did not know how to assert their rights against debt collectors' attempts to garnish bank accounts containing Social Security benefits. If you receive social security benefits, including SSDI or SSI, and are being pursued by creditors, a Michigan social security benefits attorney can explain the protections available to you.
Federal Steps to Protect Social Security Benefits From Garnishment
To protect federal benefits from being attacked by creditors, the Treasury Department recently issued a new regulation that requires banks to complete due diligence before handing over money to debt collectors. Bank officials must investigate whether Social Security benefits have been deposited in the individual's account, and must protect two months of those deposits from garnishment by debt collectors.
According to National Consumer Law Center estimates, up to one million Americans had federal benefits garnished last year.
Social Security Benefits and Bankruptcy
Whether you are considering applying for social security disability benefits and are in the middle of a bankruptcy case, or have applied for or receiving disability benefits and are considering bankruptcy, it's important to discuss your options with an experienced Michigan SSD and bankruptcy attorney. Your creditors will want any money that you have, but that does not mean they are entitled to it.
Congress specifically excluded Social Security Disability benefits from the means test income calculations in a bankruptcy filing. However, your benefits maybe includable in the preparation of any budget prepared for the court. Maximizing the relief that you are able to receive through bankruptcy as well as the Social Security benefits that you are able to maintain or that should be untouched in a bankruptcy filing requires understanding how both pieces work.
If you have questions about how your Social Security benefits are protected by law, contact an experienced Michigan benefits and bankruptcy attorney.
