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Common Concerns & Questions About Bankruptcy

Debt collection and Social Security benefits for debtors

| Jul 25, 2018 | Creditors' Rights |

Tyler residents approaching their golden years would like to be able to look forward to a well-deserved retirement. This time in one’s life is meant to be spent enjoying each day as it comes, spending time with family — perhaps children and grandchildren — and appreciating a slower, simpler lifestyle. Unfortunately, as many are still carrying significant debt later in life, the question arises as to whether one’s Social Security retirement benefits could be garnished by a collection agency.

The answer depends on what type of debt is owed. Debts like court-ordered spousal and child support, federal income tax owed, a defaulted federal home loan and some other types of debt owed to the government could lead to a garnishment of one’s Social Security benefits. There are restrictions on this, however; generally the government cannot reduce a recipient’s benefits below $750 per month, unless the debt is for federal income tax owed.

If a Tyler resident owed significant debt to non-government creditors, the good news is that it is not within those creditors’ rights to attempt to withhold money from a Social Security check. Whether it is unpaid medical bills, credit card debt or other types of loans, a retiree’s Social Security benefits are protected, as are some other types of federal government benefits (e.g., retirement benefits, Supplemental Security Income and veterans’ benefits).

Having said that, non-government creditors still have a number of tactics available to attempt to collect what is owed. While Social Security benefits are protected from garnishment from many types of creditors, foreclosed homes and repossessed vehicles may be real possibilities. Filing for bankruptcy may be worth considering as a way to obtain a fresh financial start, free from worries about debt collectors during one’s retirement years.