Although Social Security Disability is a lifeline for many, SSD benefit payments are usually not enough to lift recipients above the poverty line. The average monthly SSD benefit payment is approximately $1,000. For a recipient who is struggling to pay rent or a mortgage, as well as pay for necessities such as food and clothing, it is easy to see how that monthly payment is quickly tapped out.

Therefore, any debt or other financial obligation above those baseline necessities is often unmanageable on SSD benefits alone, forcing recipients to allow credit card bills and other debts to go into default. When creditors implement drastic measures, such as harassing telephone calls and bank account garnishment, to collect debts, SSD recipients need to know the law and how to protect their finances.

Under federal law, credit card companies and their debt collectors cannot garnish Social Security Disability benefits. This has always been the law. However, until recently, a garnishment attempt would cause the bank to freeze recipients’ accounts, tying up funds for weeks or even months as a recipient worked to defend his or her benefits.

Starting on May 1, however, electronically-deposited SSD benefits are placed into a bank account with an electronic “tag”, which requires the bank to protect those funds from garnishment. Now, when a garnishment order is received by the bank, it must determine how much of the bank account funds are exempt from garnishment, and act accordingly. The bank must also communicate with the recipient and inform them of the attempt and its results.

This is only applicable to those who receive benefits via electronic payment, so recipients should try to get on that program if they are not already.

Source: Fox Business, “Government Benefits Protected From Creditors,” Sally Herigstad, 9 May 2011