Federally Protected Income
Federal law protects the following from most creditor garnishment: Social Security retirement and disability (SSDI), Supplemental Security Income (SSI), Veterans Administration (VA) benefits, federal civil service and military retirement, Railroad Retirement benefits, and federal student aid. These protections apply regardless of what state you live in.
How Protection Works
When these funds are deposited in a bank account, your bank must automatically protect the last 2 months of federal benefit deposits from bank account levies. For direct deposit, the bank can identify protected funds electronically. For check deposits, you may need to show proof of the source. Keep federal benefits in a separate account for maximum protection.
State-Protected Income
Many states also protect: state disability benefits, workers' compensation, unemployment benefits, public assistance/welfare, crime victim compensation, and state retirement/pension benefits. Protection levels vary by state. Some states protect 100% of these benefits; others protect a percentage or dollar amount.
Exceptions to Protection
Some debts can reach even protected income: federal tax debts (IRS can levy up to 15% of Social Security), federal student loans in default (can garnish up to 15% of Social Security), child support and alimony (can garnish up to 50-65% of Social Security), and debts owed to the federal government. These exceptions are narrow but important.
Frequently Asked Questions
Can a credit card company garnish my Social Security?
No. Private creditors cannot garnish Social Security, SSDI, SSI, or VA benefits. Only the federal government (taxes, student loans) and child support/alimony can reach these funds.
What if my protected income is mixed with non-protected funds?
Commingling protected and non-protected funds in one account can make it harder to prove which funds are exempt. Best practice: keep protected income in a separate account that receives only benefit deposits.
Can creditors freeze my bank account if it only has Social Security?
Your bank must automatically protect 2 months of direct-deposited federal benefits. However, amounts beyond 2 months may require you to file a claim of exemption. Keep only what you need in the account.
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