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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP   Expert: Don Taylor, Ph.D., CFA, CFP
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Law protects SSI disability benefit
 

Dear Dr. Don,
Can credit card companies garnish my disability check if I stop paying my bills? I have gotten in way over my head and can't make my credit card payments due to illness and the cost of my medical bills and medicine. I have been paying only the amount due but have fallen way behind and now owe late fees and over-the-limit fees.

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I can't get a break to catch up, so I have stopped paying and am worried they will try to take my disability check. Thank you for any advice you can give me.
-- Rose Refrain

Dear Rose,
Yours is a common question concerning supplemental security income disability payments. The Social Security Administration's Web site has information about garnishment on a frequently asked questions page.

According to the Web site, Social Security benefits are protected from assignment, levy or garnishment in all but five cases.

5 exceptions to Social Security protection:

However, the Web site also goes on to note that supplemental security income, or SSI, payments "cannot be levied or garnished."

A key to avoiding garnishment is to not commingle your benefits with other monies in the account. Maintain a separate account for benefit payments.

You need to look beyond your fear of garnishment to how you are going to get your finances back on track. Talking with a credit counselor about your debt is a good first step. By doing so, you may be able to end the late fees, and over-the-limit fees you're racking up in these accounts.

The FTC Facts for Consumers publication, "Fiscal Fitness: Choosing a Credit Counselor," is required reading before you start interviewing credit counselors.

Bankruptcy may be your best solution. Part of the new bankruptcy law is a requirement to get credit counseling, so that step won't be wasted. The FTC has some required reading there as well with its publication, "Before You File for Personal Bankruptcy: Information About Credit Counseling and Debtor Education."

Bankrate.com's corrections policy -- Posted: April 17, 2008
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 RESOURCES
Can creditor garnish disability income?
Disability benefits are not taxable income
Disability income threshold
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