Many people find themselves in a difficult financial situation at some point in their lives. Losing a job or becoming ill can make it hard to keep up with previous obligations. Defaulting on debts can have serious consequences, including damage to your credit, lawsuits, and wage garnishment. But can creditors take your Social Security benefits if they try to collect on past-due debts?
The answer is generally no, although there are some exceptions. Social Security benefits are exempt from garnishment, meaning that creditors cannot take this money even if they win a court judgment against you. However, there are some circumstances under which creditors may be able to access your benefits, so it’s essential to know the rules. Debt settlement attorney Leslie Tayne explains what you need to know about Social Security and debt.
Different types of debt can affect your Social Security benefits, including delinquent taxes, alimony, child support, and student loans owed to the Department of Education. Depending on the type of debt, your benefits may be reduced or even withheld entirely.
Benefits protected by Social Security

Social Security benefits are generally protected from seizure by creditors and debt collectors. This protection applies even if a company sues you, you lose the case, and a court enters a judgment against you. However, this protection may not apply if you receive your benefits on a prepaid card instead of via direct deposit to your bank account.
The following benefits are protected from garnishment and bank levies thanks to federal law:
- Social Security benefits
- Supplemental Social Security Income (SSI)
- Veterans benefits
- Federal Employee Retirement System
- Civil Service Retirement System
- Federal Railroad Retirement, Unemployment, and Sickness Benefits
Debt collectors who are not affiliated with the original creditor cannot threaten to take your Social Security benefits, even if they know those benefits are your only source of income. Doing so would violate the Fair Debt Collection Practices Act.
Benefits that are not protected by Social Security

There are a few exceptions to the rule, but generally speaking, your Social Security income is protected from creditors. But, they may have other methods of collecting the money you owe, even though they can’t take your benefits.
Your Social Security benefits might be at risk if you owe any of the following:
Taxes on federal income
The federal government can withhold funds from Social Security benefits to satisfy a debt owed by the recipient. This doesn’t require a court order.
One way for the Department of Treasury to collect past due federal taxes is to withhold Social Security benefits. To do this, they may issue a Notice of Levy. Other ways to collect overdue taxes from individuals include wage garnishment and seizing assets.
Another way to collect on a debt is through the Federal Payment Levy Program. In this case, the Department of Treasury can withhold up to 15 percent of your monthly benefits until the debt is paid in full.
There is no appeal process for reductions to Social Security benefits. Once a decision has been made, it is final.
Benefits protected by Social Security

Although creditors and debt collectors may try to seize your Social Security benefits, they cannot do so as long as you receive them via direct deposit into your bank account. Your Social Security benefits should still be protected even if a company sues you and wins a judgment against you.
The following benefits are protected from garnishment and bank levies thanks to federal law:
- Social Security benefits
- Supplemental Social Security Income (SSI)
- Veterans benefits
- Federal Employee Retirement System
- Civil Service Retirement System
- Federal Railroad Retirement, Unemployment, and Sickness Benefits
As a general rule, debt collectors are not allowed to threaten to take your Social Security benefits, even if they know that those benefits are your only source of income. Doing so may violate the Fair Debt Collection Practices Act.
Benefits that are not protected by Social Security

Your Social Security income may not always be protected from creditors. There are other ways that creditors and collection agencies can try to collect the money you owe, even though they may not be able to take your benefits.
Your Social Security benefits might be at risk if you owe any of the following:
Federal income tax
The federal government can withhold funds from Social Security benefits to satisfy a debt owed by the recipient. This process does not require a court order.
One way for the Department of Treasury to collect past due federal taxes is to withhold Social Security benefits. This can be done by issuing a Notice of Levy. Other methods may also be used to collect these types of debts.
Another way to collect debts owed to the government is called the Federal Payment Levy Program. With this program, the Department of Treasury can withhold up to 15 percent of your monthly benefits until the debt is paid in full.
Unfortunately, you cannot appeal any reductions to your Social Security benefit payments. This is final and cannot be changed.
federal student loans
As you approach retirement, the government may withhold your Social Security benefits to repay any outstanding federal student loans. The federal government is the creditor for these loans, so it can take this action to recoup the money owed.
Up to 15% of your benefits could be taken through garnishment. However, the loan servicer must give you at least 30 days notice before taking this action.
What can you do to avoid having your social security benefits garnished? You may be able to negotiate modified loan payments with your loan servicer or obtain a financial hardship exemption. To get an exemption, you’ll need to complete a Request to Stop or Reduce Offset of Social Security Benefits forms through the Department of Education.
Delinquent child support and spousal support
The federal government may garnish Social Security benefits to enforce child support, alimony, or restitution payment. This can happen when someone has failed to meet a legal obligation. In such cases, current and future monthly benefits may be withheld.
It’s important to know that the government can take a portion of your Social Security benefits away from your child support.
Individuals who owe money to the government in the form of unpaid taxes may find themselves subject to garnishment orders from Social Security. This means that the government can take money directly out of your paycheck to pay off the debt. However, unlike with tax debts, individuals do not have the opportunity to appeal this decision.
SSI is not subject to garnishment or bank levy, except in the case of an overpayment where the Social Security Administration is correcting an error.
Creditors can also collect payments in other ways
You are relatively protected from aggressive debt collectors as someone who relies solely on Social Security benefits. They cannot garnish your benefits or levy your bank account as long as it only contains money from your direct deposit. While this may offer some peace of mind, it is essential to be aware of other ways creditors may try to collect payment.
Although Social Security may be your only source of income, creditors and debt collectors may still try to collect the money you owe them. Just because you are receiving Social Security benefits does not mean that companies will give up easily on attempting to collect what is owed.
Other potential actions that a company may take if they are unable to access an individual’s Social Security funds to collect a debt include:
- Reporting negative information to the credit bureaus. Bad credit can make getting approved for new loans or services tough. Derogatory information on your credit report can lower your scores and make it harder to qualify for the financing you need in the future.
- The sale of your account to a collection agency. Outstanding collections can jeopardize your ability to get new credit. Even people with good credit scores may be required to pay off exceptional collections before qualifying for new financing.
- Taking out a lien on your home or other property. Debt can be a heavy burden, and sometimes creditors may choose to sue you to receive payment. This can result in a lien being placed against your property, which makes it difficult to sell or refinance. However, a lien does not force you to sell your property outright. To make informed decisions, one must be aware of your rights and options when dealing with debt.
- Seeking a court order to seize non-Social Security funds from your bank account. Creditors and debt collectors may try to take your Social Security benefits by obtaining a court judgment against you. However, you can protect two months’ worth of benefits by keeping them in a separate account at your bank or credit union.
- Seizing your tax refund. Did you know that the government can hold your tax refund? Unpaid debts can lead to your refund being taken away. And it’s not just the government that can do this – private creditors in some states can also take your refund. So, before you deposit your refund into your bank account, make sure you don’t owe any money.
The best way to deal with creditors

It can be tempting to ignore your financial problems when you have more debts than you can afford to pay. It may seem like a temporary solution, but putting the issue out of mind will not make it go away. Facing up to your financial difficulties is the first step to getting back on track.
It’s easy to ignore your debt and hope it will go away, especially when your Social Security benefits aren’t at risk. This is usually a mistake since defaulted debts can quickly become more significant problems. Instead of pretending your debt doesn’t exist, here are some better alternatives to consider.
Take a look at your budget
While it is essential to be mindful of one’s spending, especially for those on fixed incomes, there may be ways to reduce monthly expenses. By closely examining where money is being spent each month, it may be possible to cut back on specific areas. Any extra funds freed can be put towards other financial goals, such as paying off debt or creating an emergency fund.
Seek the help of a credit counselor
Credit counseling can help you get your finances back on track. A qualified credit counselor will review your financial situation and develop a debt management plan (DMP) that consolidates your debts into a single, more affordable monthly payment. This can help you get out of debt faster and improve your financial health.
This can be a great way to reduce the interest rate you are paying on debts and have creditors waive any fees they may be charging. In most cases, a credit counseling program will take between three and five years to complete. Additionally, there may be setup fees and monthly administration fees from the credit counseling organization.
Obtain bankruptcy protection from your creditors
Bankruptcy is often seen as a last resort option, but for many people, it can be the best way to protect their assets and get out of debt. Filing for bankruptcy can help you avoid credit damage, and although it may be challenging to qualify for new credit post-bankruptcy, it is still possible. Some debts, such as past-due taxes and federal student loans, are not eligible for inclusion in a bankruptcy filing, but this is not a significant issue for most people.
Steps to follow

There are many myths about what happens to your Social Security benefits when you can’t afford to pay your debts. The truth is, your gifts are usually safe. But that’s not always the case. Before you decide not to pay a debt, you must talk to an attorney about the potential consequences you could face.