by Christopher Jackson, JD

While garnishment merely requires a court order to occur, you might still have protection against creditors following a judgment against you. Some sources of income are protected from garnishment under federal law, such as Social Security benefits, Supplemental Security Income (SSI) benefits, and Veterans’ benefits. For most seniors, the implications for their Social Security benefits are of their highest concern.

Under federal law, Social Security benefits that are not commingled or combined with other funds are protected for an amount equal to two months of benefits. Not commingling your funds, which means keeping them in an account separate from all other income or savings, is important because it allows your financial institution to determine if the funds are protected under Federal law. For example, if you receive $1,000 a month in Social Security benefits, and these benefits are deposited in an account that only holds your Social Security benefits, an amount up to $2,000 is protected from garnishment. After this initial $2,000, any additional balance is subject to garnishment by creditors.

Another way to protect your Federal benefits from garnishment is to have your benefits placed on a Direct Express card. These cards completely protect your benefits from garnishment. It is important to realize, however, that there are some fees associated with these cards. Yet, the benefits of using a Direct Express card can outweigh its fees in some garnishment situations. In addition to Direct Express cards, some financial institutions provide Electronic Transfer Accounts (ETAs). These ETAs allow Federal benefits to be placed in the account, protecting the funds from garnishment, at minimal cost to the account holder.

If you have yet to retire, and are still working, creditors can attempt to garnish your paychecks. Under federal law, a minimum of $217.50 per week is protected from garnishment. If you make more than $217.50 per week, up to 25% of your additional income is garnishable. It is important to note that these limitations do not apply to court orders for child support or alimony – those set-offs do not have limitations. Due to the lack of protection, paychecks are much more vulnerable to garnishment than other forms of income.

If you are contacted about a garnishment against you or if a court action is filed against you for debt collection, it is important to contact an attorney. If you feel that you need assistance regarding garnishment or just have questions about the topic, please call the Legal Hotline for Michigan Seniors at Elder Law of Michigan at 1-800-347-5297.

[This blog post is the second of a series of three concerning bank garnishments. Read the first post of the series here.]

Christopher Jackson is an attorney at Elder Law of Michigan, and has been a member of the Elder Law team since early 2014. Christopher holds a Bachelor of Arts in Political Science and International Relations from the University of Indianapolis, and graduated with his Juris Doctor in 2013 from Michigan State University College of Law. As an attorney at Elder Law, Christopher provides legal advice to Michigan seniors on a wide-variety of areas, including estate planning, wills and trusts, Medicare/Medicaid, social security benefits, and insurance issues.