Dear To Her Credit,
I got a call from a credit card debt collector today who said he could get a garnishment on my Social Security benefits. He says he can take 25 percent of my monthly check. I can barely get by on my benefits as it is. They are my only source of income.

What can I do? -- Margaret

Dear Margaret,
He can't take your Social Security check or any part of it. Nor can he keep calling you and ruining your day -- if you know your rights.

Social Security benefits are generally exempt from garnishment, except in cases of unpaid taxes and child support. This debt collector is hoping you don't know that and that you will fork over the money.

There is another way he could get your benefits, however. If a creditor goes to court and gets a court order to have the bank freeze your checking account, the effect will be much the same as garnishment. If your Social Security checks are deposited directly into your account and the bank freezes your account, you won't be able to pay your bills. Plus, it could take weeks or even months to get it all straightened out.

Some states have recognized this problem and have tried to pass laws prohibiting banks from freezing accounts that contain exempt funds, such as Social Security benefits. In other states, banks have more discretion in deciding how much effort to make in determining if most or all of your money is from exempt sources.

For example, Jay Spruill, general counsel of the Virginia Bankers Association, says, "In Virginia, you would be able to claim the Social Security benefits as exempt property through the court. The garnishment form that is served on the bank and the customer, advises the customer how to go about claiming the exemption, so the customer does have the ability to get the funds 'unfrozen' or returned if they have already been delivered to the court."

Banks would rather not have to decide which of your funds are exempt; in fact, they have resisted being put in the position of having to make that decision. Spruill says, "The problem for a bank that tries to make this determination is that a bank account may contain both exempt and nonexempt funds. As a practical matter, the bank would have to do research to determine the source of the funds, which would create significant challenges. For example, how far would the bank have to look back to determine whether the account had any nonexempt funds?"

"That is why the court should make the determination as to whether funds in an account are exempt," Spruill says.

Here's what you can do:

  • Check with your bank and ask them about their policies. If it seems embarrassing to go to your local bank and ask about garnishment policies, call by phone or go to another branch. You can also seek free or low-cost legal advice about the laws in your state and how you can avoid having your account frozen.
  • If you're worried about your account being frozen and you get your benefits by direct deposit, consider going back to paper checks. Call (800) 772-1213 or go to the Social Security Online Services. Then, if your account is ever frozen, at least you will be able to cash the next check that comes, instead of having it land in a frozen account.
  • The next time this collector calls, tell him not to contact you by phone anymore. Ask him for an address where you can write to him. Then download a cease-and-desist sample letter, fill in the blanks and send by certified mail.
  • Look for long-term solutions to your financial problems. If you need outside help, contact the Association of Independent Consumer Credit Counseling Agencies  or the National Foundation for Credit Counseling.

A word of caution: Do not call shady debt elimination operations or other companies that do not adhere to professional standards. These companies can leave you in worse shape than before.

If you wait until your account is frozen, you'll have to go to greater lengths to undo bank fees and to get your benefits back. Take steps to protect your benefits now.

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