Can Social Security benefits be garnished over card debt?
By - - | Published: May 4, 2009
The Credit Guy
Dear Credit Guy,
I recently became unemployed but do have Social Security benefits to pay the necessities. Can the credit card company garnish my monthly benefits because I'm unable to pay? I've requested the credit card company to modify my payments or decrease the interest rate in the past, but to no avail. I rent, no car, no other assets. Outstanding credit card balance is $7,000. I would appreciate a response. -- R.D.
It is very unfortunate that you are among the many people who have recently lost their jobs. You do at least have some income with your Social Security benefits, which should provide you with some peace of mind that you are able to meet your essential expenses.
Let me also assure you regarding potential garnishment of Social Security benefits. As long as the account where your benefits are deposited only contains those funds and no other income source, your account cannot be garnished unless it is to satisfy a government debt such as income taxes owed or child support or alimony. If you have other funds in the account where your Social Security benefits are deposited, you might consider separating and moving those funds into a savings account or separate checking account to assure your benefits remain safe from garnishment.
Although your credit card debt is unsecured debt and the credit card company cannot garnish your Social Security benefits, you may still have options to pay what you owe and keep your credit history from getting any worse than it may already be. In a joint effort with the Association of Independent Consumer Credit Counseling Agencies (AICCCA), the National Foundation for Credit Counseling (NFCC) recently announced a new program with credit card issuers that allows many people who would otherwise not qualify to repay their debts in a Debt Management Program (DMP).
The "Call to Action" program gives credit counselors more options to qualify consumers with lower income levels for repayment plans that will allow them to pay what they owe on their credit card balances. To learn more and determine if repaying your debt through a DMP is the best option for you, contact a qualified credit counselor through AICCCA or NFCC.
Until you are able to find another job, you must create a spending plan to live on your Social Security benefits alone. To do that you will need to make the necessary adjustments to your spending habits to avoid going into the hole each month. It sounds from your question like you may be well on your way to accomplishing this goal. Keep in mind that "wants" will have to be forgone for "needs" until you can increase your income.
If you need help budgeting your decreased income, About.com has helpful budget planning information that can get you moving in the right drection.
Take care of your credit!
Meet CreditCards.com's reader Q&A expertsDoes a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- Q&A: Should I close high-limit, zero-balance cards I don't use? – If you have several credit cards with high limits and no balance, which you hardly use, you might consider closing one of them, especially if it has an annual fee. Just make sure to keep your oldest cards open ...
- Q&A: What to do if merchant details on card statement are unfamiliar – Finding charges inaccurately reported on credit card statements can be annoying, but disputing them can be cumbersome. Keeping receipts and tracking expenses can help you figure out legitimate expenses without having to initiate a chargeback ...
- Q&A: Can I transfer my own credit card to my partner's name? – Have an authorized user who charges on your card more than you do? While you can't transfer the card to his name, you still have options, such as transferring any debt he may owe to a new or existing card in his name ...