Social Security checks come with several legal protections, but they are not entirely untouchable when it comes to addressing outstanding debts. It is important that, given the delicate economic situation in the United States, retirees are aware of the excellent protections provided by federal law regarding the garnishment of Social Security to pay debts. In some cases, the Internal Revenue Service (IRS) has the authority to withhold a portion of the check in the event of outstanding federal taxes. Another situation in which a percentage can be withheld is when there is a debt from federal student loans, including Parent PLUS loans, on which up to 15% of the monthly benefit may be withheld.
It is also possible to withhold part of Social Security if a federal agency or the Social Security Administration itself determines that there were overpayments in the past. If you have credit card debt, loans, personal loans, medical bills, etc., they cannot be collected from or withheld from your social security. In order to ensure that these withholdings do not affect the retiree’s quality of life, there are repayment plans based on income and programs that can prevent default.
Debts in retirement
Social Security is, for millions of retirees in the United States, the sole and exclusive source of their income. It is no secret that the U.S. economy is in a delicate situation, with persistent inflation, rising costs of housing, food, medicine, and interest rates that continue to grow exponentially. This leads to an increasing dependence on payments from the Social Security Administration, including retirement Social Security. What often becomes a headache for retirees is outstanding debts. At first glance, Social Security is well protected, but there are exceptions under federal law that allow deductions from checks to collect outstanding debts.
Debt collection
The Internal Revenue Service (IRS) has the ability to withhold a percentage of benefits received from Social Security in the event that there are outstanding federal taxes. It is true that in order to maintain a minimum income during retirement, the seizure cannot be total, but in some cases, it affects the benefits, no matter how small. The exceptions outlined by federal law where money can indeed be withheld and allocated are as follows:
- Federal student loans. These include Parent PLUS loans, which can be subject to garnishment of up to 15% of the monthly benefit, which is a considerable impact.
- Child support debts. If there are unpaid child or spousal support payments, garnishment also applies, depending on the court order in effect.
- Overpayments from federal agencies. If the Social Security administration or a federal agency determines that excessive payments were made in the past, a percentage will be withheld each month until the repayment is complete.
What can be done about it?
It is also worth noting that unsecured debt, credit card debt, personal loans, or medical bills cannot be garnished from Social Security, regardless of the retiree’s situation. It is important to know that there are income-based repayment plans and hardship programs that can prevent reaching these situations. Additionally, you can also reach agreements with the IRS to address your tax debts through long-term payment plans or settlement alternatives.
Frequently asked questions
What debts can reduce my Social Security check?
Only federal taxes, federal student loans, child or spousal support, and repayments for overpayments from federal agencies.
Which bills cannot touch my benefits?
Credit card debts, personal loans, and medical expenses are protected by law and cannot be garnished from Social Security.
How can I avoid having my money withheld?
There are income-based repayment plans, hardship programs, and settlement agreements with the IRS to avoid garnishments.