Social Security recipients face a risk not only from their own debt troubles but also those of the people that take care of them. If you receive Social Security or take care of someone who does, you should know about this.
Secret Danger of Garnishment to Social Security Recipients and Others
As I have pointed out in my video about garnishing Social Security, Social Security benefits are exempt from most forms of garnishment. The notable exceptions to that rule is that they may be garnished by certain government entities and for child support.
Although Social Security benefits are exempt from most forms of garnishment, collectors sometimes attach and take them. When a collector garnishes a bank account, the bank holds the funds for a time to allow you to fight the garnishment. In plain English, they “freeze” the account, and you can’t get your money.
As a practical matter, you may be unable to fight the garnishment. Thus if you have paid for bills with an account that holds Social Security benefits, it makes sense to switch those benefits to another bank if that creditor later gets a judgment against you. Once they get a judgment, the debt collector will look for your assets. It will try to garnish any assets in a bank they have on file for you.
I realize this can be difficult or disruptive, but if you have paid an original creditor or debt collector out of an account, you must expect that account to be garnished – seized and taken away from you – if the debt collector manages to get a judgment.
If the debt collectors seized an account, you may or may not be able to get the money back. There will certainly be a delay, and all the money in the account, up to the amount of the judgment, will be held by the bank and unavailable to you.
Debt collectors sometimes garnish the accounts of Social Security recipients because of their caretakers.
Social Security recipients are often elderly or disabled, needless to say. Many of these people need other people to do shopping for them. Or to hold their assets in one way or another to use for their benefit. This money is held in trust and should not be available to debt collectors going for the caretaker’s money.
Here is an example that might make it clearer. Assume that Tom is taking care of Mary, his 70 year old mother. She suffers from Altzheimer’s. Mary and Tom will frequently find it helpful to allow Tom to use Mary’s account to pay her bills. If Mary’s account contains only Social Security benefits, it should be beyond the reach of any creditor. And because the money is not Tom’s at all, it should never be reachable by Tom’s creditors.
However, sometimes debt collectors will discover that Tom is paying bills using Mary’s account. If his name is on the account, or if he writes checks upon it, the debt collectors may attempt to garnish the account.
This is not as “evil” as it may first appear. From the debt collector’s point of view, how do they know what bills Tom is paying with the account? People often hide assets from debt collectors by using other people’s accounts. The law lets creditors go after the debtor’s money regardless of whose name it is in.
On the other hand, the impact on Mary of seizing her account for Tom’s debt can be devastating. Remember, the banks will freeze the account for a while to determine whether the debt collector can take it. During that time, the elderly person cannot pay her bills. She may be evicted, be unable to pay for medicine, or face other, life-threatening and disrupting events.
Get Legal Advice
If there is a judgment against you, seek the advice of a lawyer specializing in debt collection before linking anyone’s accounts to you in any way. In my opinion, the risk extends beyond just having your name on the account. If you sign checks for someone else and have a judgment against you, you may be putting this person at risk. Get legal advice and protect them and you.