Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Can Student Loan Lenders or the IRS Garnish Your Social Security?

If you are facing collection actions by your student loan lender or by the IRS, one of the first questions you may have is how far can they go to secure payment?  Beyond the incessant calls and collection letters, can they garnish your social security?

Social Security income and retirement income are protected from garnishment under federal law by most collectors. However, does this protection include student loan creditors and the IRS? The IRS and public student loan lenders are authorized to garnish a portion of a senior’s Social Security income, this amount being capped at 15 percent of that person’s income. If the collection efforts are on behalf of state tax collectors or a private student loan entity, they cannot garnish Social Security of seniors’ retirement income. Before garnishing a senior’s Social Security income, the IRS or public student loan collector is required to notify the senior in advance via U.S. mail.

When it comes to pensions or Veteran’s Affair’s benefits, the IRS or public student loan collectors do not normally garnish these forms of income, so these benefits are, in fact, protected.

Once you have been notified that your Social Security income will be garnished, you do have options. The collection from these benefits from lower-income seniors can be stopped or at least the payments reduced significantly.

Seniors who are on the lower-income spectrum can apply and be approved for a Currently Not Collectible (CNC) status for past-due IRS taxes. These individuals must fall within a certain level of income, which is normally under 200 percent of the poverty line in most states. If they qualify, they will not have to pay for past IRS taxes, meaning their Social Security incomes will be protected from garnishment. It is important that seniors investigate whether they do qualify before paying. Many of them falsely assume that they have no choice but to pay. It helps to talk to a credit counselor or a bankruptcy attorney who can advise the individual on what his or her rights are.

When it comes to public student loans, lower-income individuals, including senior citizens, can attempt to qualify for an income-based repayment plan to help prevent the garnishment of their Social Security income. They may not be able to completely avoid the garnishment altogether, but they can at least reduce the amount being paid in accordance with their incomes. The process is somewhat more complicated than the IRS process, but it can be accomplished with proper guidance. If you can qualify for an income-based repayment plan, this savings can be just what you need to stay afloat financially.

Federal law explicitly states that Social Security benefits are exempt and such funds are protected in bankruptcy. If you are filing for Chapter 7 bankruptcy in Florida, you can use Florida bankruptcy exemptions to protect your property, your social security, retirement savings and more.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at