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New Jersey SSD benefits generally can't be garnished by creditors

Newark, New Jersey, residents who receive Social Security Disability (SSD) benefits know that the money they receive each month is vital for day-to-day living expenses. However, when that income is subject to garnishment, meeting financial obligations can easily become very difficult. The federal government understands this problem and therefore, put measures in place to protect SSD benefits from garnishment.

In addition to SSD benefits, these federal protections are also applicable to incomes that are a part of Veteran's Affairs benefits, Supplemental Security Income benefits, Railroad Retirement benefits and benefits paid by the federal Office of Personnel Management. These exceptions are mentioned in Section 207 of the Social Security Act.

Earlier, creditors could garnish income from these sources after the money reached a recipient's bank account. Nonetheless, since March 2011, a federal ruling prohibited garnishment within two months of deposit, if the benefits were directly deposited into the account by one of these federal benefit programs.

The earlier laws meant that banks would freeze an account after creditors approached them with a garnishment request and that account would remain frozen until the creditors and debtors determined what amount from that bank account was exempted from garnishment and what was not. Since March 2011, banks have to scrutinize the request and determine whether any amount directly deposited in the past two months is available for garnishment.

There are certain exceptions to this rule, though. For example, outstanding federal taxes, outstanding child support or outstanding alimony can be garnished from SSD benefits. Again, if a deposit is more than two months old, it can be garnished by a creditor. Garnishment is also possible if the SSD benefits recipient transfers the money from one account to another.

Source: ConsumerFinance.gov, "Can a creditor garnish my Social Security benefits to pay a debt?," accessed on Feb. 21, 2015

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