Federal law protects Social Security money from garnishment, whether seniors file for bankruptcy protection or not. But debt-plagued seniors who choose not to file still need to protect their Social Security money, according to Fort Lauderdale, Fla., attorney Teisha Powell.

"Remember, at the time a creditor obtains a judgment, they will just garnish the bank account," says Powell. "This means the creditor will have no way of figuring out that the Social Security income has been deposited in the bank account and exempted."

According to Powell, seniors should keep Social Security money in a separate account, and they should notify creditors in writing that the account contains only Social Security money. In addition, a new rule effective in May 2011 is designed to help prevent financial institutions from just handing over account money to creditors.