Home Legal FAQ Collections Are my Social Security or private pension benefits subject to attachment and/or levy by my creditors?
Are my Social Security or private pension benefits subject to attachment and/or levy by my creditors? Print

Generally, no. Attachment occurs when a creditor or other person to whom you owe money is entitled to take a portion of your property, usually money, to settle your debt.

Social Security

Social Security benefits are not generally accessible by your creditors. Veterans’ benefits are also not generally accessible by your creditors. However, these benefits can be garnished to enforce alimony and/or child support payments, and the federal government may garnish Social Security and Veterans’ benefits to satisfy a tax debt.

Even though Social Security and Veterans’ benefits are not generally accessible by your creditors, problems can arise if your government benefit checks are deposited into an account that also contains money from other sources. If the other income sources are not exempt from garnishment, creditors may improperly seize your benefits because it is difficult to distinguish your benefits from your other income. Also, if you share a bank account with someone else, your benefits may be at risk. If your benefits are seized, you will have to show that the garnishment was illegal and that the funds were protected. It may be wise to open a separate bank account for your government benefits to guard against improper seizure.

Private Pensions

Federal law also protects certain types of private pensions from creditors. To qualify for federal protection, a pension must conform to the guidelines in the Employee Retirement Income Security Act (ERISA). These pensions are referred to as Qualified Plans. Even under ERISA, however, you are still allowed to voluntarily use up to 10% of the benefits to pay a debt. This means that you can use up to 10% of the pension to pay a debt if you want, but a creditor cannot attach a Qualified Plan pension without your approval.

In addition, private pensions may be used to fulfill a Qualified Domestic Relations Order (QDRO). A QDRO is a court order that allocates a portion of your benefits to a family member, such as a spouse, former spouse, child, or other dependent. The order gives the family member a right to take part or all of the pension benefit. Usually QDROs are used for alimony or child support purposes.

Finally, the federal government may garnish private pension plans to collect taxes due.


For more information, see: 29 U.S.C. §§ 1056(d)(1)–(3) (2010); 38 U.S.C. § 5301(a) (2010); 42 U.S.C. § 407 (2010); 42 U.S.C. § 659(a) (2010); Simmons v. Simmons, 175 W. Va. 3, 330 S.E.2d 325, 327 n.1 (1985) (questioned on other grounds); Philpott v. Essex County Welfare Board, 409 U.S. 413, 34 L.Ed.2d 608, 93 S.Ct. 590 (1973) (superseded by statute as stated in Rodriquez v. Perales, 86 N.Y.2d 361, 657 N.E.2d 247, 633 N.Y.S.2d 252 (1995)); National Consumer Law Center, Surviving Debt: A Guide for Consumers (5th ed. 2005).

 

Last Updated on Saturday, 02 February 2013 11:15