Protected Income?

[maxwell18]

I am drawing military retirement, VA disability and Social Security and have been told that these monies cannot garished and or be suited for. Is this true if protected is all my income not touchable, unless IRS or child payments? Where can I find the answer?
Thanks very much

[flyinbroke]

I am fairly certain federal laws protect all of these things, but once they are in bank accounts can be fair game in case of a judgment. It would seem that banks and CAs don't play fair with what is not touchable.

[maxwell18]

Thanks, how would they get a judgement on my bank account. Can they attach your property and money?

[tigergem]

Social Security disability checks are funds that are deemed exempt from collection under federal law. Except for a few instances, such as child support or non-payment of federal taxes, can SSA funds be garnished; even then there are caps to ensure that a person is left with enough to live on.

If you get direct deposit of social security and your bank account is seized by a regular creditor, it is my understanding that you can copy this and take it to your bank and let them know they have violated the law:

Federal law makes Social Security benefits exempt from levy, garnishment, and assignment- 42 USC 407(a) states. "In general the right of any future payments under this sub chapter SHALL NOT be Transferable or assignable. AND NONE of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levey, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law".

This means that even if a creditor or debt attorney, collection agency has a judgement against you they CAN NOT garnish your SS payments nor can they take the money from you after it has been paid to you; for example, the portion of your bank account that is attributable to your SS benefits is EXEMPT from LEVY OR ATTACHMENT.

It is also my understanding that this is only applicable if you have NO OTHER FUNDS other than exempt funds being deposited into that same account! (I am not 100% positive of this... somebody else may know more about co-mingling of funds.) So. I think that means if you are working part time and also having that money direct deposited to the same account, the account is not protected. I also do not know if that means the ENTIRE amount is not protected, or just the amount that can be attributed to some other means than exempt income.

I play it safe and have a separate account for my social security direct deposit. If I get a part time job or something, I will just open a different account for it.

And I think (again not 100% sure) that you can protect your bank accounts from being seized by naming a joint account holder who is not someone you are married to.

I'm sure there are more people more knowlegable than I am on these matters, but that is the best of my understanding. I hope that helps somewhat.

[wickedlate]

I had a bank account seized that had a joint account holder that was not related to me.

[maxwell18]

Again, thanks for the info. So let me see if I got this correct so far. Social Security is safe from everything ) except IRS and certain child support) if not co-mingled with other unprotected funds. Now does anybody know about regular miltary retirement or va disability? I do have a bankruptcy lawyer but it seems as all lawyers they want to talk about everything, but not what I want to talk about. We are waiting for a means test to see if we would have enough money to live under chap 13, or just walk away from everything including our house that is upside down 120K. If all my income is protected we would be in the driver seat sort of speak. Was thinking about trying to lease to purchase before walking away to have a place to live, all bills are current. Any ideas. Thangs again.

[StartingOver08]

Just a small caution here: be very, very careful with the account that has social security funds. Not only can there be no other deposits from any other source at any time, you can not even have a refund to the account or it will lose its protected status. For example, lets say you have a debit card on the account and you buy *something* and the vendor makes a small mistake and corrects the mistake right away crediting the wrong amount and debiting the right amount. Sounds like it should be ok, right? Wrong. The creditors know that that will kill the exempt status of the bank account in which the ss funds are held. I just read an extensive legal discussion among judges and bank officials regarding this (I'll see if I can locate it and post). Seems to me the way to protect the account is to have the deposits go directly into a savings account and withdraw the funds from the savings and use in an attached checking that keeps a small balance so you only risk the checking and not the savings. IMO.

[frogger]

Thanks, how would they get a judgement on my bank account. Can they attach your property and money?

A judgement would not be obtained on your bank account. A judgement would be obtained on you, and then whoever obtained the judgement would get a fifa.

Once a fifa is obtained, they the holder of the fifa will try to seize any asset that they can find that belongs to you. If and when they find your bank account, they will notify the sheriffs department with the information and the sheriff will serve the bank.

Once served, your account will be frozen for 30 - 45 days (your mileage may vary). During this period, you have the right to pay the holder of the fifa for the debt, and then they will dismiss/release the fifa against your account.

If you do not pay the debt, then all of the funds in that account that are needed to satisfy the fifa will be seized.

Now here's the real kicker.....

You are probably not going to be notified that your account has been seized. All of those checks that you have written are going to bounce. Your debit card will no longer work. It's not a pretty sight.

[flyinbroke]

Here is what I found: http://www.helpwithmybank.gov/faqs/b...sh.html#drop04

Federal law says that many federal benefit payments like Social Security benefits, Supplemental Security Income benefits, Veteran’s benefits, and Railroad Retirement benefits are not subject to garnishment. This means that these funds are exempt and you may be able to stop your creditors from taking these exempt funds from your bank account. However, there are some exceptions. For example, your Veteran’s benefits, Social Security, or other government benefits may be garnished to pay delinquent child support, alimony, federal taxes, or other specific kinds of debt.

The types of state benefits subject to garnishment and those that are exempt vary from state to state. You may want to contact an attorney or the consumer protection bureau in your state for more information.


(And everyone is right, ONLY exempt funds can go into this account. I have a play money account for eBay sales, work bonuses and other things that turn out to not be exempt. In my state wages are exempt.)

[OHBOY]

A while back I read somewheres (maybe on this forum?)about a case where a lawyer SUCCESSFULLY argued in court that SS benefits on direct deposit at a bank were NOT EXCEMPT as they were comingled with..... 1cent (!!!) of interest.

So, the moral of the story is, that even if one has a seperate account for (i.e) SS, not to have an interest bearing checking account...
Personally I have taken steps not to have direct deposit for SS anymore...went with debit card..don't feel like fighting to get my exempt monies back after they have been snatched.

[maxwell18]

I have to ask, what is fifa?

[frogger]

It is actually a writ of fieri facias.

Here's a good link to read up on it:

http://www.lectlaw.com/def/f112.htm

[ghk3rd]

I know there is a debit card for ssa benefits only. Does anyone know if there is one for federal employee retirement accounts ?