We have previously written that no one applies for Social Security Disability benefits reasonably expecting to strike it rich. Most Americans who qualify for and receive Social Security Disability Insurance or Supplemental Security Income live on a very fixed budget and often have difficulty making ends meet. They may even have significant debt.
How are SSDI and SSI regarded when it comes to debt obligations? Can these benefits be garnished if the recipient owes money to creditors or the government? As usual, the answer depends on which program a person is enrolled in and to what entities they owe money.
SSDI is funded through the Social Security taxes that get taken out of the paychecks of most Americans. Besides having an approved disability that does not allow you to work, you also need to have worked and paid enough into the fund in order to be eligible for benefits.
SSDI benefits are safe from most creditors but not from the government. Your SSDI benefits could be garnished by the government to cover your unpaid financial obligations including:
- Overpayments received from governmental agencies
- Overdue taxes
- Federal student loans
- Overdue child support
SSI is both funded differently and treated differently (in terms of garnishment protections) than SSDI. Supplemental Security Income is based on financial need without regard to the work credits one has or has not earned. You must still have a qualifying disabling injury or medical condition and prove that you are unable to work because of it.
The funding for SSI comes from general tax revenues. Those who receive SSI benefits do not have to worry about them being garnished, because these benefits are completely protected. This includes protection from the IRS.
Both SSDI and SSI tend to cause a lot of confusion and prompt questions among those either applying for or receiving benefits. An experienced Social Security Disability attorney can be a good resource for understanding and navigating what is often a complex system.
Source: Credit.com, “Can a Debt Collector Come After My Social Security?” Gerri Detweiler, May 23, 2014