The Law and Your Benefits

• Federal law bars the garnishment of Social Security disability benefits, or Supplemental Security Income, by creditors. This includes back pay which you receive in a lump sum. There are a few exceptions to the law: Disability can be garnished for back child support, overdue federal taxes or any other debt owed to federal agencies, while SSI benefits are exempt from garnishment for these and all other debts.
  
  

Mingled Funds

• If a creditor seeks to enforce a judgment against you, he will notify your bank, which will then place a hold on your account. It is your responsibility to ensure this won't happen by notifying your bank that only Social Security disability or SSI deposits make up the source of funds for your account. If you receive other income, either earned or unearned, you should create a separate account for those funds. If you have reason to suspect an order of garnishment, you must separate your Social Security benefits and make them the exclusive source of money in one of your accounts.
  
  

Banks and Garnishments

• When a bank receives an order of garnishment, it will attempt to carry out the order by first freezing your account; if the bank is unaware that the account is funded by Social Security benefits, you won't be protected. Removing a hold on a bank account can be a time-consuming procedure, and you may be subject to overdraft fees and other charges if you've authorized debits or written checks against the account which the bank will not honor.
  
  

Direct Deposit

• As some added insurance, you should instruct Social Security to transfer your benefits by direct deposit. The agency carries out an electronic transfer directly into your bank account. This allows the bank to more easily identify the source of the deposit. Paper checks, of course, can be lost or stolen; if you need to identify the source of funds for a Social Security manual deposit, you must have the bank track down an image of the check.