Exempt Accounts

• Personal bank accounts (both checking and savings) and certificates of deposit are specifically exempt from garnishment, levy and attachment pursuant to Title 42 of the United States Code, Section 407. Social Security retirement, disability, supplemental income, spousal and other Social Security beneficiaries (such as children receiving Social Security payments as a result of having a disabled parent) are usually protected from garnishment and/or levy of social security income proceeds.
  
  

Child Support

• An exception from the Social Security benefit assignment prohibition includes the right of a person entitled to child support to attach a certain percentage of Social Security income payments which are otherwise payable to an SSD or SSDI recipient in order to satisfy current and/or past due child support obligations.
  
  

Federal and State Income Tax

• Most IRS income tax obligations can be enforced through assignment and levy collection methods up to a certain percentage of the Social Security recipient’s income and non-exempt assets.
  
  

Student Loan Repayment Obligations

• Recent federal court opinions have ruled that obligations resulting from federally guaranteed student loans may be satisfied (subject to percentage limitations) through assignment, levy and garnishment of Social Security income benefits. Experts who practice income tax law generally agree that courts will continue to expand those judicial opinions relative to government repayment obligations in future cases other than just federal student loan situations.
  
  

Bankruptcy Protection Exemption

• Title 42 U.S.C. Section 407 (a) extends the garnishment and levy prohibitions to debtor income and assets pursuant to “the operation of any bankruptcy or insolvency law” and specifically includes a provision that applies the prohibitions to situations in which a social security benefit payee representative exists.
  
  

Significance

• Even where a debtor is earning wages from employment while also receiving Social Security benefit payments, additional protections and exempt income and assets are provided for pursuant to state and federal laws. The purpose of these protections is primarily due to public policy concerns which would otherwise undermine the basic and underlying goals that enactment of Social Security laws were originally meant to accomplish.