Can My Disability Benefits Be Garnished?

Garnishment is a legal process where a portion of an individual’s earnings or assets is withheld to satisfy a debt. This typically involves a court order directing a third party, such as an employer or bank, to collect funds. While wage garnishment commonly applies to salaries, its application to disability benefits introduces complexities due to specific legal protections. Disability benefits are often treated differently under the law when it comes to debt collection efforts.

Understanding Disability Benefit Types

Disability benefits in the United States come from several sources, each with distinct eligibility criteria. Social Security Disability Insurance (SSDI) provides benefits to individuals who have worked and paid Social Security taxes for a sufficient period.

Supplemental Security Income (SSI) is a needs-based program providing financial assistance to low-income individuals who are aged, blind, or disabled, regardless of their work history. SSI is funded by general tax revenues, not Social Security taxes.

Veterans Affairs (VA) Disability Benefits are provided by the Department of Veterans Affairs to veterans who have service-connected disabilities. These benefits compensate veterans for injuries or illnesses incurred or aggravated during their military service.

Beyond federal programs, some states offer their own temporary or long-term disability programs. Eligibility and specific rules for these state disability benefits vary significantly by jurisdiction. Additionally, private disability insurance policies are available, offering income replacement if a disability prevents someone from working.

General Rules for Garnishing Disability Benefits

Federal law provides strong protections for certain disability benefits against most types of creditors. Social Security benefits, encompassing both Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), are largely shielded from garnishment by commercial creditors. This means that debts such as credit card balances, medical bills, or personal loans generally cannot lead to the direct garnishment of these federal payments.

These protections extend to funds once they are deposited into a bank account. A federal rule, often called the “bank account protection” or “Garnishment Protection Rule,” requires banks to review an account’s history when a garnishment order is received. If federal benefits, like Social Security, have been directly deposited into the account within the past two months, the bank must protect an amount equal to those direct deposits from garnishment by most creditors. Any funds exceeding this two-month protected amount could potentially be subject to garnishment.

Veterans Affairs (VA) disability benefits also generally enjoy robust federal protections from most creditors. These benefits are typically exempt from claims by commercial entities seeking to collect on various consumer debts.

However, the level of protection can differ for state and private disability benefits. These types of benefits may have varying, and often weaker, protections depending on specific state laws or the terms outlined in the private insurance policy. State and private disability benefits may be more susceptible to garnishment by general creditors compared to their federal counterparts. Disability benefits are not universally immune from all debt collection actions.

Debts That Can Lead to Garnishment

Despite general protections, certain types of debts can lead to the garnishment or offset of disability benefits, even those typically protected under federal law. Child support and alimony obligations are common exceptions where Social Security Disability Insurance (SSDI) and Veterans Affairs (VA) benefits can be garnished. For these debts, federal law generally allows garnishment of up to 50% of benefits if the individual supports another spouse or child, and up to 60% if they do not. An additional 5% can be garnished if payments are 12 or more weeks in arrears, potentially reaching 65% of the benefit. Supplemental Security Income (SSI) benefits, however, are generally protected from child support and alimony garnishment.

Overdue federal student loans can also result in the garnishment of Social Security benefits, including SSDI, through an administrative offset. The Department of Education, through the Treasury Offset Program, can withhold up to 15% of monthly Social Security payments to repay defaulted federal student loans. This garnishment must leave the beneficiary with a minimum monthly benefit of at least $750.

The Internal Revenue Service (IRS) can levy Social Security benefits, including SSDI, for unpaid federal income taxes. The IRS can garnish up to 15% of each monthly Social Security payment until the tax debt is fully paid. VA benefits can also be garnished for federal taxes. SSI benefits are exempt from garnishment for unpaid federal taxes.

Other federal non-tax debts, such as overpayments of federal benefits from other agencies, can also lead to an administrative offset of Social Security benefits. Up to 15% of Social Security benefits can be withheld for these debts, with a protected amount of $750 per month. Some states may have specific laws that allow for the garnishment of state-specific disability benefits for certain state-level debts, which can vary widely by jurisdiction.