I'm 68, retired, living on disability income only. Can a creditor garnish for failure to pay my unsecured credit card?
I've written about how abusive debt collectors can be, and have offered advice on how to deal with them in previous blogs.
But today, I want to zero in on an actual situation we dealt with recently.
A client of ours is 68 years old, retired, and living on disability income only. He rents and must spend a large amount of money each month on medicine and medical treatment for his disability.
In order to make ends meet, he has had to use his credit cards as so many people have done and continue to do today! Let's not get into whether he should or shouldn't have, it is what it is.
One of his creditors called. After using several intimidation tactics,the collection agent told him that if he did not set up a repayment agreement, they would take him to court and sue him. So he agreed to a repayment plan of the entire amount even though he could not afford it!
He contacted us after the agreement was made and we explained to him that even though the creditor has a right to be paid and could choose to file a claim in order to be awarded a default judgment, they could not touch his disability income.
According to the Federal Trade Commission certain wages are EXEMPT from garnishment:
Can federal benefits be garnished?
Many federal benefits are exempt from garnishment, including:
- Social Security Benefits
- Supplemental Security Income (SSI) Benefits
- Veterans’ Benefits
- Civil Service and Federal Retirement and Disability Benefits
- Service Members’ Pay
- Military Annuities and Survivors’ Benefits
- Student Assistance
- Railroad Retirement Benefits
- Merchant Seamen Wages
- Longshoremen’s and Harbor Workers’ Death and Disability Benefits
- Foreign Service Retirement and Disability Benefits
- Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
- Federal Emergency Management Agency Federal Disaster Assistance
But federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.
This also applies to funds in your bank account.
But be careful here!
If you co-mingle funds, meaning you earn a little extra income in addition to your disability income, DO NOT PUT THOSE FUNDS IN THE SAME CHECKING OR SAVINGS ACCOUNT!
You should open a 2nd account for that extra income (and keep the balance very, very low!)
After explaining this (again) to our client, we have helped stop the agreement.
DON'T BE INTIMIDATED! If you are, perhaps you should seek the professional help of a debt management company.
Photo by Caston Corporate
