Recently, I received a letter from a very upset woman regarding a lawsuit filed against her arising from credit card debt. She wrote:
I am 63 and on Social Security Disability. A collection agency sent me paperwork to go to court, or so it appeared. There was no court. Then 2 weeks later they got a judgement. They are well aware that I am on Social Security Disability & went for the judgement anyway. What are my rights? This has taken a toll on my mental & physical health.
Here are my thoughts: Federal law is clear that except in very limited circumstances (certain child support, tax, or Social Security related debts), creditors may not garnish an individual’s Social Security money. This means that the creditor cannot directly serve a notice of garnishment on the Social Security Administration, nor may a judgment creditor like a credit card company attach a debtor’s bank account to the extent that that bank account contains funds directly traceable to the protected Social Security money.
Obviously it can be difficult to untangle “co-mingled” funds so I generally tell my Georgia Social Security disability clients to keep their Social Security money in a separate account. Interestingly, some states are now protecting non-Social Security money in co-mingled accounts – read my Debt Law Network colleague Peter Orville discusses a proposed New York consumer protection law that protects up to $2,500 of funds in a bank account that also contains Social Security money.
Regardless of the protection offered in your state, the protection extended to Social Security money does not mean that a creditor may not sue a disability claimant, obtain its judgment and wait for the day when the claimant/debtor obtains property, loses disability benefits or obtains another source of money.
If your account contains protected money, you should notify your bank in writing that any attempted seizure of your bank account is improper. Similarly you should notify the collection lawyer that he will be held accountable if he improperly grabs your money.
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