Debt Collection and Social Security Disability Income

The time that it takes to be approved for Social Security Disability benefits is getting longer and longer. Many people who receive benefits waited for as long as up to three years from the time they first applied to the time they received money from the Social Security Administration (SSA). Since applicants for Social Security Disability benefits cannot work, they often use up whatever savings they had pay living expenses while waiting for their benefit applications to be approved. Many fall behind in paying bills because they ran out of money and worry that creditors will simply take their benefits once received. It is important for people who receive disability benefits to know which creditors can access their benefits and how to protect their money from creditors who cannot.

Different Types of Disability Benefits

There are two types of Social Security Disability benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). People who are disabled but have worked long enough to become "insured" under Social Security receive SSDI. Those who are disabled but have not worked enough to qualify for SSDI and have very few assets may qualify for SSI.

People need to know which type they are receiving because the two are subject to different collection exemptions.

When the Government Is the Creditor

For the most part, Social Security benefits are exempt from debt collection actions. The main exception to this rule is when the government is the entity seeking to collect. The government may garnish SSDI for student loans, unpaid taxes and unpaid child support.

Not even the government may garnish SSI benefits, however. Congress decided as a matter of public policy that SSI benefits would be protected because people who receive SSI get so little money in benefits and have so few assets that it would not be fair to take what little the recipients receive each month.

How to Protect Benefits from Creditors

Even though Social Security Disability benefits are safe from creditors' collection attempts, it does not mean that some collectors will not try to take the money. It is not uncommon for collection agencies to have banks freeze people's accounts while the bank determines whether the funds in the account are protected or not.

The best way to keep disability payments safe from most creditors' collection attempts is to open a separate account for those funds. That way the bank can clearly see that the only deposits that go into the account come from the SSA. Additionally, it is wise to keep the account in the benefit recipient's name only, to avoid creditors of other family members trying to garnish the funds.

People who receive disability benefits are often struggling to make ends meet. Their benefits are exempt from most creditor collection actions, but they may still run into problems with creditors trying to garnish their protected funds. If a creditor is going after your disability benefits, contact an experienced attorney who can advise you of your options and help you enforce your rights.