Any loan you take out must be repaid unless the creditor states otherwise or decides to forgive your debt. Failure to repay what you owe at the agreed time could result in some punishments. First off, the creditor may resort to pressure and a few threats. Afterwards, he may decide to slap you with late payment fees and hike your interest rate. If that doesn’t work, the creditor may resort to selling your debt or filing a lawsuit. If the lawsuit is a success, your wage will be garnished. What if what you have is your SSDI can? Will it be garnished?
A disability check can be garnished by the Federal Government and used to settle a debt owed to it. A debt collector or a creditor on the other hand, cannot garnish your Social Security disability benefits, Supplemental Security Income, or disability insurance.
The thought of having your debt sold to a collection agency or having your wage garnished is enough to send chills down your spine. Both scenarios will impact your finances in ways unimaginable. If you owe a couple of debts, ensure you make an effort to pay them in time. However, if you are struggling to pay back and the creditor doesn’t want to negotiate, it makes sense to understand which of your wages is subject to garnishment. Is SSDI garnishment possible? Read on to find out.
Can Medical Bills Be Sent to Collections if You Are Making Payments?
Can a Disability Check Be Garnished?
Paying back a loan, especially if it’s a huge one, can be quite difficult, which is why I often advise people to think of these few things before taking out a loan:
- Do I really need the money?
- Can I repay the loan at the agreed time?
- What will happen if I can’t repay the loan?
In my years as a financial adviser, I have come to realize that people take out loans recklessly and when they realize it is often too late. Managing the little you have is far better than taking out a loan and failing to repay what you owe.
If you default on a loan, you’ll face several sanctions, and one of them is wage garnishment. Sometimes, you may not see it coming. And that is why you see some debtors eagerly asking questions like “What income can be garnished?” or (for the disabled people benefiting from SSDI) “can SSDI be garnished?”
As we progress, I’ll reveal if, indeed, SSDI garnishment is possible. However, before we delve into that, let’s look at what SSDI?
What is SSDI?
Social Security Disability, also known as SSDI, is a government program that offers financial assistance to disabled persons who cannot work. Individuals receiving benefits under this program must have paid Social Security FICA taxes via their paycheck. The amounts SSDI recipients get usually depend on their respective earned work credits.
Disability Check Garnishment: Possible or Not?
Since SSDI is deemed a wage or income, you find people asking questions like, “Can social security disability benefits be garnished? The answer is a huge NO! Generally, creditors, credit card companies, mortgage lenders, or auto financing companies cannot garnish Social Security benefits like disability checks or Supplemental Security Income. While this rule stands, there are a few exceptions.
Exceptions:
The federal government can garnish your SSDI to settle money owed to it, like back taxes or defaulted student loan payments that the federal government has guaranteed.
In addition, your Social Security Disability Benefit can be garnished pay for court-ordered victim’s restitution or child support obligations.
Worthy to note, if you receive Supplemental Security Income, it cannot be taken to settle even child support, student loan payments, or unpaid taxes.
Illicit Garnishment:
In spite of the rule, Social Security Disability and Supplemental Security Income money is sometimes illicitly garnished or levied from bank accounts. This usually happens when banks comply with court orders for garnishment without reviewing the source of the income. However, thanks to the federal law passed in 2011, banks are now required to assess accounts to determine if Social security funds are present before going ahead with garnishment.
Suppose you have some disability funds in your account, and you think that your creditor may move to file a garnishment order against you. In that case, it is best to file a document with the court indicating that your income is protected from creditors.
When a Creditor Decides to Garnish Your Wages:
A wage garnishment, also synonymous with wage attachment, is a court or government agency order initiated by a creditor. This order requires your employer to retain a certain amount of money from your wages and send it to your creditor as payment for your debt. The percentage of wages a creditor can garnish depends on the type of debt you owe, including the federal and state garnishment limits.
Wage garnishment is often a last resort for creditors, and this is because the process of garnishing a debtor’s wage can be expensive. So most debtors will resort to sanctioning you before they decided to take the case to court.
Normally, any creditor can decide to garnish your wages. However, some creditors must meet some requirements before being authorized to garnish your wages. Specifically, most creditors are required to file a lawsuit and obtain a writ of garnishment before proceeding to garnish your wages.
What Is a Good Debt-to-Income Ratio?
What Income Cannot Be Garnished?
After trying all the available legal methods to compel you to pay what you owe, most creditors will either sell your debt or file a lawsuit. If the creditor is successful with the lawsuit, your wages could be garnished; that is, the court will order your employer to retain a certain amount of your wages and send it to your creditor as payment for your debt. However, fortunately for you, not all income can be garnished.
Income that a creditor cannot garnish is Social Security Benefits, disability payments, retirement funds, and child support. While creditors cannot garnishes these incomes, you must note that some can be garnished by the federal government and used to pay debts you owe them.
Wage garnishment can have a huge effect on your finances. In fact, it can push you deeper into debt. That said, ensure you make an effort to pay what you owe before it is too late.
