Approximately 70 million people receive some sort of Social Security income each month, including almost 90% of Americans age 65 or older. In other words, Social Security payments play a vital role in our society. These important benefits are usually protected from creditors, but there are a few exceptions. This protection is sometimes, but not always, automatic. This article covers which benefits are automatically protected and how you can protect those that aren’t. It also covers the exceptions to the rule — situations in which Social Security benefits aren’t protected. Finally, it explains how bankruptcy could be an alternative way to protect your Social Security income.
Written by Attorney Paige Hooper.
Updated October 26, 2022
How Do Levies and Garnishments Work?
If you have unpaid credit cards, medical bills, or other debts, your creditors can sue you for the amount you owe (plus interest and other charges). When a creditor files a lawsuit against you, they must notify you and give you a chance to respond. If the evidence convinces the judge that you owe the debt, the creditor wins a judgment against you.
The Creditor Gets a Court Judgment
A judgment is a court document stating that you owe a debt and ordering you to pay it. A creditor that has a judgment against you is called a judgment creditor. Having a judgment against you gives a creditor more options for collecting money from you, such as garnishing your income or levying your bank account.
Wage garnishment is the most common garnishment procedure. For a wage garnishment, the court orders your employer to withhold a certain amount of money from your paycheck and send it to the creditor. The amount withheld and the number of paychecks that can be garnished depends on your state’s garnishment laws. Garnishment can apply to other types of income besides wages, including Social Security benefits.
For a bank levy, the court orders your bank to take money out of your bank account and send it to the creditor. A levy usually results in your bank account being frozen until the transaction is complete. If you have multiple accounts at the same bank, the levy may affect all your accounts.
Different states use the words garnish and levy in different ways to refer to these procedures. In this article, garnishment means taking money from ongoing income — taking money before you receive it — and levy means taking money from past income — taking money that you’ve already received.
Usually, a creditor must have a judgment against you before they can garnish your wages or levy your bank account. But for certain types of debt, such as back taxes or unpaid child support, a judgment isn’t always required.
Can a Creditor Garnish Ongoing Social Security Benefits?
As a general rule, no. Most creditors can’t take money from your future or ongoing Social Security income. Social Security benefits you haven’t yet received are usually protected against garnishments by private creditors, such as banks and credit card companies. These protections are written in the federal Social Security laws and are mirrored in the laws of most states. Of course, there are some exceptions to this rule.
The Exceptions to the Rule: When Social Security Payments Can Be Garnished
The Social Security Administration can garnish, or withhold, money from your ongoing benefit payments to pay certain kinds of debts, including:
: The amount that can be withheld from each benefit payment depends on your state’s law, but it can’t be more than 60% of the total benefit amount. If, in addition to the support in question, you also support another child or spouse, the maximum amount is 50%. If your support payments are more than 12 weeks past due, the federal maximum limit increases by another 5%.
Delinquent criminal restitution payments: The total amount that can be withheld from each payment is based on your state’s law but  of the total payment amount.
: The Department of the Treasury can garnish up to 15% of the total payment amount. They don’t need to get a judgment against you to take this amount.
Other delinquent federal non-tax debts: In addition to federal tax debts, the Treasury Department can also garnish your benefits to collect past-due debts owed to other federal agencies. This includes federal student loans. Like tax debts, the amount garnished can be up to 15% of the total payment amount. Unlike tax debts, these garnishments can’t reduce your payment below $750.
Importantly, your Social Security payments can only be garnished for these debts if you’re behind on your payments. Your benefits can’t be withheld to pay these debts if your payments are current.
The Exception to the Exception: Supplemental Security Income
There are four primary kinds of Social Security benefits:
Retirement benefits: These benefits are available to retired workers age 62 or older. Payments are based on current age, number of years worked, and pre-retirement salary.
Supplemental Security Income (SSI): These benefits are available to people who can’t earn a living wage on their own, either due to age or disability.
Social Security Disability Insurance benefits (SSDI): These payments are available to qualified workers who can no longer work due to disabilities.
Survivors benefits: These benefits are available to the surviving spouses and children of deceased workers.
The exceptions covered in the previous section apply to all types of Social Security benefits except SSI. Ongoing SSI payments can only be garnished by the Social Security Administration and only for the limited purpose of recovering an overpayment of benefits.
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Can a Creditor Levy Social Security Benefits From a Bank Account?
Most Social Security income is protected from creditors even after it arrives in your bank account. In some cases, your benefits are automatically protected, with no action required by you. In other cases, the available protections aren’t automatic — it’s up to you to enforce them. In yet other cases, your benefits aren’t protected at all.
The Automatic Protection Rule
In 2011, the Treasury Department  requiring banks to automatically protect certain federal benefits, no matter what else is in the account.
Here’s how it works: If your bank receives an order to freeze or levy funds from your account, it must first check to see whether any Social Security benefits have been directly deposited into that account within the past two months. If so, then the bank must calculate the “protected amount.”
The protected amount is either:
The total of all Social Security and other qualified federal benefit payments directly deposited into your account during the two-month period (sometimes called the “lookback period”), or
Your account balance at the time of the calculation, whichever is less.
The bank must keep the protected amount available for you to use. It can’t be frozen or sent to a creditor. There is no limit on the amount that can be automatically protected. This means that lump-sum payments will be protected if they were deposited during the lookback period. It doesn’t matter whether there is money from other sources in the account or if you own the account jointly with another person.
That said, there are some restrictions:
To qualify for automatic protection, your Social Security payments must be either directly deposited into your account or directly loaded onto a benefit card. Benefits paid via paper checks don’t qualify for automatic protection.
Benefits that were deposited more than two months ago — for example, the unused portion of a lump-sum benefit payment — also don’t qualify for automatic protection.
If you transfer benefits to another account after they’re deposited, they no longer qualify for automatic protection.
Only the official “protected amount” is safe from creditors. Additional funds in your account beyond this amount can still be levied or frozen.
State Exemptions and Other Protections
Even if the Social Security income in your bank account doesn’t qualify for automatic protection, that doesn’t mean you must turn it over to your creditors. Some of the benefits in your account might be protected under your state’s laws, but not under the federal automatic protection rule.
The following are some examples:
Benefits that were deposited into the account more than two months ago
Benefits that were transferred to a different account after their initial deposit
Benefits you received via paper check
All states have exemption laws. Assets protected under these laws are exempt (protected) from garnishment or levy by creditors. Exemption laws vary from state to state, but most state exemptions include some protection for Social Security and other federal benefits.
To take advantage of your state’s exemption, though, you must notify the court that issued the levy order that the money in your account is exempt. This usually involves filing a form or notice with the court and sometimes attending a hearing.
You’ll also need evidence showing that the money in your account qualifies for the exemption. This is why, despite the automatic protection rule, it’s still a good idea to keep Social Security payments in a designated account, separate from your other money. A separate account makes it much easier to prove to a judge that the money in question is protected.
After you receive notice of a bank levy, you’ll need to act quickly to claim your exemptions. Depending on your state law, your bank account may be frozen until the court determines whether the money is exempt. In some states, the bank can send the money to the creditor after a certain time, even if your exemption claim is still pending. Money that has already been sent to a creditor takes much more time and effort to recover.
If the benefits in your account don’t qualify for your state’s exemption, or if you can’t prove that the funds in your account are exempt, you may still be able to protect them by filing bankruptcy. More on that below.
When Are Benefits Not Protected Against Creditor Levies?
For certain types of debt, neither the automatic protection rule nor state exemption laws protect your Social Security benefits from being frozen or levied. These are the same kinds of debts listed earlier as exceptions to the no-garnishment rule. In other words, if a creditor could garnish your ongoing Social Security payments, that creditor can likely also levy Social Security income from your bank account.
There is an exception for SSI benefits, even from these types of debts. No creditor, including the Social Security Administration, can levy SSI benefits from your account once you’ve received them. That said, in some cases, you may be required to prove that the money in your account is SSI income.
Filing Bankruptcy To Protect Social Security Income
If your Social Security benefits don’t qualify for any of the above protections, filing bankruptcy may be a way to protect your benefits from levy or garnishment, at least temporarily. The Bankruptcy Code’s automatic stay provision stops all collection actions immediately the moment you file.
Many debts can be discharged, or wiped out completely, in bankruptcy. Even for debts that can’t be discharged, such as past-due child support and certain tax debts, bankruptcy can provide an opportunity to avoid garnishment or levy and work out other payment arrangements with the creditor. You won’t lose your Social Security benefits just because you file bankruptcy — they’re still protected under state or federal exemption laws.
What Does It Mean To Be Judgment-Proof?
If protected Social Security payments are your only income source and you don’t have many assets, you may be considered judgment-proof. Being judgment-proof means that if a creditor sues you and gets a judgment against you, they’ll have no way to collect that judgment. (Of course, that doesn’t mean they won’t continue calling you and sending you collection notices.) Even if you’re currently judgment-proof, you might still benefit from filing bankruptcy.
Remember, you may be judgment-proof now, but that may not always be the case. Judgments and other debts can remain active and continue to show up on your credit report for a long time. Even if you’re judgment-proof, you still owe the debt. And if your situation changes, you could be stuck paying it — plus years’ worth of interest.
Bankruptcy, on the other hand, could be a way to eliminate the debt completely. If you have limited assets and income, you’ll likely have no problem qualifying for bankruptcy. But qualifying for bankruptcy or protecting all your assets in bankruptcy could become more difficult if your circumstances change.
If a creditor gets a judgment against you, they can use garnishments or levies to try to collect the judgment debt. Creditors can only take money from your ongoing Social Security payments for a few limited types of debts. These include delinquent alimony and child support, past-due criminal restitution payments, and certain other delinquent debts owed to the government.
Money from Social Security payments in your bank account is also protected, except for the debts listed above. Sometimes this protection is automatically enforced by your bank. If not, you must notify the court and prove that your funds qualify for protection. Bankruptcy may be another way to protect your Social Security benefits from creditors. Even if you’re currently judgment-proof, you might still benefit from filing bankruptcy.
- National Archive: Code of Federal Regulations. (n.d.). Code of Federal Regulations: Title 31, Subtitle B, Chapter II, Subchapter A, Part 212. National Archive: Code of Federal Regulations. Retrieved October 17, 2022, from https://www.ecfr.gov/current/title-31/subtitle-B/chapter-II/subchapter-A/part-212/