On disability, can't pay card debt: Is garnishment a possibility?

Disability income is generally exempt from garnishment

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

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Question

Dear Credit Guy,
I’m on disability and make $755 a month. I can’t afford to pay my credit card debt. Will they take my disability money? – Dawne

Answer

Dear Dawne,
In general, disability income is exempt from garnishment by federal law, except in the cases of unpaid child support, alimony, federal student loans or taxes.

You don’t say if your disability income is through Social Security or through a private resource. Social Security disability income is always protected; private disability is mostly protected as well.

  • If you receive your disability check through direct deposit and you do receive a notice of garnishment, your bank is required to first look back two months to see if the funds in your account came from a protected source. Assuming this is your only income, you should not have a problem.
  • However, if you deposit your check manually, it will be your responsibility to prove where the funds came from. In addition, if you do receive funds from another source, those funds might be subject to garnishment.

How garnishment works
Garnishment is generally a last-resort attempt by a creditor to collect on a debt. Before that happens, you will be contacted.

If that happens:

  • Never ignore correspondence regarding a court order.
  • Show up for court hearings. Not showing up virtually guarantees that the court will find in favor of the creditor.
  • Seek the advice of an attorney to help you.

Dealing with credit card debt
You don’t say how much credit card debt you have. I am going to assume that you no longer have access to any credit on these cards, but if I am wrong in that assumption, I have to tell you that you need to stop using the cards now and do not incur any additional debt.

Ignoring your debt is not an option. Late fees will start to add up quickly, maybe even pushing you over your credit limits (if you are not there already). That will result in over-limit fees. In addition, your creditors will continue to contact you for payment.

One thing you might explore is seeking some type of employment, if that is possible. Or, you could sell some assets and use those funds to pay your debt.

You can also contact a nonprofit credit counselor to help you. Your initial consultation is always free; your counselor will go over your situation and offer advice on the options that are available to you.

I hope these suggestions will give you possible alternatives to deal with your debt while still giving you access to your disability income.

Take care of your credit!

See related: How wage garnishment works – and how to avoid it, Living on disability with $8,000 in card debt

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Updated: 11-17-2017