You've worked hard to secure your Social Security disability insurance (SSDI) benefits, but financial challenges remain. As the bills pile up and creditors start calling, a worrying thought enters your mind: Can they take my SSDI payments to cover these debts? The last thing you need is to lose the income you rely on for necessities.
Experienced disability attorney Phillip M. Hendry knows how stressful it can be to face the possibility of SSDI garnishment. He's here to provide straightforward answers about when your Louisiana SSDI benefits might be vulnerable to seizure and what you can do to protect your financial stability.
Federal Law Shields Most SSDI Benefits From Garnishment
In most cases, your SSDI payments are safe from the reach of creditors. The Social Security Act exempts these benefits from garnishment, attachment, or seizure for common consumer debts, including:
- Credit card balances
- Unpaid medical expenses
- Personal or payday loans
- Private student debt
- Civil court judgments (except those owed to the federal government)
Even if a creditor successfully sues you for an outstanding balance, they generally cannot touch your SSDI benefits to satisfy the judgment. If your SSDI funds are directly deposited into your account, your bank must automatically protect an amount equal to two months of payments from garnishment.
Exceptions to SSDI Garnishment Protections
While SSDI benefits enjoy broad protection, there are a handful of circumstances where they may be subject to garnishment under Louisiana law:
Tax Debts Owed to the IRS
If you have unpaid federal income taxes, the Internal Revenue Service (IRS) can levy a portion of your SSDI benefits to collect on the debt. Before taking this step, the IRS must send you multiple notices, including a Notice of Federal Tax Lien and a Notice of Intent to Levy. These notices are typically sent over several months, giving you time to respond and negotiate a payment plan or other resolution.
If you receive a Final Notice of Intent to Levy, the IRS can garnish up to 15 percent of your monthly SSDI benefits. It's crucial to consult with a tax professional or disability attorney right away to explore your options for resolving the tax debt and preventing garnishment.
Delinquent Child Support and Alimony Payments
Your SSDI benefits can be garnished to enforce court-ordered child support or alimony obligations in Louisiana. Your SSDI payments are considered income under the state's guidelines when calculating child support. If you fall behind on these payments, the state child support enforcement agency can request that the Social Security Administration withhold up to 65 percent of your SSDI benefits.
This 65 percent limit includes 50 to 60 percent for current child support or alimony payments and an additional 5 percent for back payments. If your sole income is from SSDI, the garnishment may be reduced to ensure you retain sufficient funds for basic living expenses.
Defaulted Federal Student Loans
The U.S. Department of Education can administratively garnish a percentage of your SSDI benefits if you default on federal student loans. However, private student loan companies do not have the same garnishment powers as the federal government.
Other Debts Owed to Federal Agencies
Rarely, other federal debts, such as delinquent home loans owed to the Federal Housing Authority (FHA), may be collected through SSDI garnishment. Before they withhold any funds, the agency must provide written notice and an opportunity for you to request a review or dispute the debt.
Protecting Your Louisiana SSDI Benefits From Garnishment
Losing a portion of your SSDI benefits to garnishment can be devastating, making it even harder to make ends meet while managing a disability. Depending on your unique financial circumstances, you may have options to:
- Negotiate an installment agreement or offer in compromise with the IRS
- Request a modification of your child support or alimony order based on disability
- Consolidate or rehabilitate defaulted federal student loans to halt garnishment
- Challenge improper garnishment attempts by asserting your SSDI exemption rights
- Explore bankruptcy or other debt relief solutions to address unmanageable debts