Can a loan company garnish a persons disability income for an outstanding debt?

Answer 1

Although each state has different laws. You still have to read the contract you signed. Let's just say that you signed a loan that states they have the right to offset any and all deposit accounts and you bank with the same company then yes once those funds are deposited they have the right to take what they owe.

But if you have a loan with someone else and bank elsewhere it depends on your state laws but most states will not allow but some will so you really need to find your state laws. For instance the state of NY does not allow you to garnish disability income but a company or person that has a lawsuit against them can garnish all other wages. The it also flips because in NY if you have a loan with a bank and you also bank with them there contract states they have the right to offset all your accounts this mean disability monies and also any accounts you are on with children, mother husband and business. The only accounts that are safe or authorized signer accounts.

Social Security and Garnishment:

Generally, Social Security benefits are exempt from execution, levy, attachment, garnishment, or other legal process, or from the operation of any bankruptcy or insolvency law. The exceptions are that benefits are subject:

(1) to the authority of the Secretary of the Treasury to make levies for the collection of delinquent Federal taxes and under certain circumstances delinquent child support payments; and

(2) to garnishment or similar legal process brought by an individual to enforce a child support or alimony obligation.

Section 207 of the Social Security Act provides: "The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law."

However, section 6331 of the Internal Revenue Code of 1954 (26 U.S.C. 6331) which was enacted into law on August 16, 1954, after the enactment of section 207, gives the Secretary of the Treasury the right to levy or seize for collection of delinquent Federal taxes, property, rights to property, whether real or personal, tangible, or intangible and the right to make successive levies and seizures until the amount due, together with all expenses, is fully paid. References: SSR 79-4: SECTIONS 207, 452(b), 459 and 462(f) (42 U.S.C. 407, 652(b), 659 and 662(f)) LEVY AND GARNISHMENT OF BENEFITS 20 CFR 404.970 SSR 79-4 Se