How To Protect Your Social Security Check

There are special laws in place that protect Social Security checks from debt collectors. You may need to take a few extra steps if you wish to use these laws.

In most situations, there is no way for debt collectors to ever take disability money (except the obvious way = you give it to them).

The rules are different for different kinds of debt. Here you can learn who can and can’t take Social Security money.

If the debt collector can’t take your money, they can’t take it. But they are still going to try to. (They are debt collectors after all!).

Here is how to protect yourself:

How To Protect Your Bank Account from Being Frozen

Sometimes debt collectors try to freeze your bank account. If you want to stop this from happening , there are some steps you can take.

There are three ways Social Security can send you money:

Paper checks: Never protected

1. Social Security sends you a paper check in the mail.
2. According to the law this money is not protected at all.
3. You are allowed to cash the check and take the money out of your bank account.
4. If you leave the money in your account, any amount you leave can get frozen. Then you will have to work with the bank or go to court to get it unfrozen.

Direct deposits into your bank account: Protected for 60 days

1. Social Security puts money directly into your bank account.
2. According to the law, this money is protected for 60 days, as long as you don’t move the money and don’t transfer it into a different account.
3. To stay protected, the money needs to be left in the bank account where it was received. If you move the money you will lose all protections.
4. Try not to deposit any other kinds of money into this account. If at all possible, try to keep this account Social Security money only. If it is intermingled with other funds it may be more difficult to protect.
5. Important: To stay protected, the money needs to be either spent or taken out in the bank within 60 days.
6. After 60 days, if any amount is left, this money can be frozen.

Direct express cards: Always protected

1. Direct Express cards are like credit cards that have your Social Security money already loaded onto them. They can be used the same way as credit cards.
2. Direct Express cards have the same protections as bank accounts.
3. Since your Direct Express card will only contain Social Security funds, you do not have to worry about intermingled funds.

Please Double Check 

Financial regulations are complex and can change. Please double check and do more reading before making any important decisions. Here’s a few places where you can get started:

• Social Security & Debt Collection from NOLO
• Social Security & Bank Accounts from the Consumer Protection Financial Bureau
• Can a Debt Collector Garnish My Federal Benefits?

Special Notes About Backpay

For SSDI

1. There are no restrictions on what you do with your backpay money.

For SSI

1. Backpay should be spent within 9 months of receiving it. If you receive multiple checks, then each one has a nine month limit.
2. You are allowed to keep your backpay in a bank, or withdraw it in cash, or keep it in any other way you wish.
3. After the nine months have passed, any amount you have left over is counted as an asset and should be reported as an asset to Social Security.
4. If you have too many assets, your SSI will stop until the assets are spent.
5. Do not give your backpay money away and do not transfer it into someone else’s name. You are allowed to spend it, but not give it away.
6. If you first became disabled before the age of 26, you can deposit your backpay into an ABLE account. Some people find this a convenient way to store backpay.

Big Exception

If you have ever given the creditor permission to take money directly out of your bank account, then they can just keep taking it forever and none of the protections above will help you until you withdraw the permission. You will need to write to them and withdraw the permission.

Another option is to just close the bank account and go to a new bank. Creditors don’t get to just follow you around and keep taking money out wherever you are.

If you are getting a big backpay check, don’t put it in an account where you have given creditors permission to take money from your account. Your backpay may suddenly disappear.

If Debt Collectors Try to Freeze Your Bank Account

If you follow everything above, and the bank still freezes your account, they have made a mistake. Notify the bank that this account is funds from Social Security (they should automatically know this, but just in case).

If Debt Collectors Take You To Court

I have read that it is important to always go to court and never ignore a court notice. Before your court date, you can send in a form called Objections to Garnishment. Creditors will not be allowed to take any of your Social Security money, and they will be required to return any money they have taken without your permission. Google MC-49 Social Security Objections to Garnishment for more information.

If Debt Collectors Call or Write You

How you respond is important and can make your debt better or worse. You can send them a letter that your income is Social Security funds. Here’s more about how to respond when creditors call you.

What Happens if I Don’t Pay My Debt

It depends on the type of debt and your financial situation. If the only money you have is Social Security, in many cases the answer is: nothing. There may literally be nothing a debt collector can do. In other situations, this may cause issues. Learn more about what happens if you don’t pay your debt.

If your only income is from Social Security, and you don’t own any assets, you may be considered “judgement proof.” This means debt collectors cannot take your money. Learn more: How To Be Judgement Proof

If I Don’t Pay, Will I Owe Money Forever?

In most cases, no. Most private debt will expire. Government debt can be different.

If I Do Pay Will I Owe Money Forever?

Maybe. If you keep paying it will never expire. Learn more here.

Keeping Money in Cash

You are allowed to keep your money in cash, or to take cash out of the bank. However, you must accurately report the amount of cash that you have whenever you apply for or get reviewed for food stamps, SSI, Medicaid, or housing assistance.

If you keep your money in cash and spend it, make sure to keep receipts. There is a chance that you will be asked for these receipts to prove that the money is spent and that you are not hiding or underreporting any savings.

Giving Money Away

If you are in any needs – based programs (such as food stamps, Medicaid, or SSI) you have to be very careful about giving money away. Many programs will put a penalty on money that is given away. These rules are often called “transfer of resources.”

From Readers

“Most of my debts are being erased through bankruptcy, and my federal student loans are getting disability-discharged. I stopped auto-pay on my private student loans and then, for unrelated reasons, changed banks. Phew! I’m not a criminal, for crying out loud, just a sick person trying to get by.”

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