Dealing with Debt

questions & answers

Question: As a 67 yr. old retiree with an income of 11,645 yearly from S.S. and a small retirement pension, are these monies subject to credit card debt collection? Other than two older vehicles, I have no assets.

Answer:

Pensions are exempt under federal law, ERISA. Federal law of course trumps state law.

Exempt Funds/Garnishment What federal benefits are ordinarily exempt from garnishment? The Federal Trade Commission (FTC), the nation’s consumer protection agency, has suggestions on how to protect your federal benefits from garnishment. The federal benefits that are exempt from garnishment include: •Social Security Benefits •Supplemental Security Income (SSI) Benefits •Veterans’ Benefits •Civil Service and Federal Retirement and Disability Benefits •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. https://www.consumer.ftc.gov/articles/0114-garnishing-federal-benefits

However, there are some situations where these funds are not protected and may be garnished. For example, some of these federal benefits may be used to pay delinquent federal taxes or student loans. Others, such as Social Security benefits, may be deducted before you receive them to pay child support or alimony. The law varies from state to state as to what types of state benefits are subject to and exempt from garnishment. For more information, you should contact an attorney who practices in your state, your state or local consumer protection agency, or a legal aid office in your area. https://www.consumer.ftc.gov/articles/0114-garnishing-federal-benefits

How to keep creditors from obtaining the exempt funds in bank account? You or your attorney will want the judge to decide that the funds in your bank account are exempt under federal law. This will usually involve a hearing before a judge. You should be prepared to submit any documentation that you have showing that your bank account contains exempt funds. If the federal government provided your benefits through electronic deposits, you should submit documents showing these deposits and their source. If the federal government provided your benefits through paper checks you deposited in the bank, you should submit bank deposit slips, statements from the agency that is the source of the exempt funds, bank account statements, or other documents demonstrating that the account contains exempt funds. If you can show the judge that your bank account contains funds exempt under federal law, the judge will not allow the creditor to obtain these funds to pay the judgment against you (or to collect these funds as fees). https://www.consumer.ftc.gov/articles/0114-garnishing-federal-benefits

What should I do next if the judge issues an order saying that funds in my bank account are exempt? You should show the judge’s order to your bank and demand that the bank lift its freeze on your exempt funds, if it has not already done so. In addition, you should ask your bank to waive or refund any NSF or other fees resulting from the freeze. https://www.consumer.ftc.gov/articles/0114-garnishing-federal-benefits