Bankruptcy and Social Security Income

I live on social security income.  Can a creditor garnish my checking account?

Social security income is exempt from the reach of creditors. That is, a creditor cannot garnish social security income. A person receiving only social security income is judgment proof. Such a person does not need to file for bankruptcy, because the creditor does not have a right to any of the social security income.

However, the picture is not that simple if that person receives social security income and some other form of income such as retirement income that is not from social security. The creditor is entitled to go after the other form of income.

The best way to protect the social security income is to put it in a separate checking account that is not co-mingled with any other source of income.  That way, it is protected from the reach of creditors.

Just because a creditor cannot reach a person’s social security income does not mean the creditor will stop its collection efforts.  To stop harassing creditor calls, see “How to Stop Annoying Creditors.”

But even if a person has a separate bank account for their social security income and follows the directions in “How to Stop Annoying Creditor Calls,” if there are other assets that the person owns, such as a home, the creditor can go after those assets.  For example, a creditor can put a lien on a person’s home even if it cannot collect any of the social security income. The lien will just sit there until the house is sold or inherited by loved ones.  When ownership of the house changes hands, the lien will have to be paid off.

The best way to get rid of debts, even if one is on social security, is to file for bankruptcy.  Bankruptcy will discharge most debts permanently, and if there are any liens on the Debtor’s home, the liens can be removed during bankruptcy.

If the person on social security income do not plan to sell his or her home and is not concerned about inheriting loved ones, the liens on the home will not matter.

But if a person on social security income is being harassed by creditors, its best to talk to a qualified attorney who can help map out a strategy that best meets that person’s needs.  The Law Offices of Alice Vacek Aranda PLLC offers a free one half hour consultation.


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