Identification

• Garnishment is a process creditors use to enforce unpaid debts. There are two ways to use garnishment to collect debts. The first type is when a creditor garnishes a bank account. When a creditor garnishes a bank account, the court orders the bank to freeze the account until the debt is paid. The second type, which could apply to Social Security disability income, is wage garnishment. With wage garnishment, the creditor requests that a third party withhold a portion of the debtor's income.
  
  

Features

• Creditors can garnish wages only by getting a court order. While the rules and procedures differ from state to state, the overarching process remains the same. A creditor must first obtain a money judgment against a debtor from a court. Once the creditor obtains a judgment, it may request that the court order an employer (or, in this case, the Social Security Administration) to intercept a portion of the debtor's wages and pay that money to the creditor.
  
  

Significance

• Creditors attempt to garnish wages once a debtor has defaulted on a loan. Default simply means that the debtor stopped making payments. Wage garnishment is typically used by unsecured creditors because, unlike with a car or home, there's no asset that the creditor can take possession of to satisfy the debt. The most common creditors that use wage garnishment as a debt-enforcement mechanism are credit card companies. Credit card companies extend debt to consumers only on their promise to pay back whatever credit they've spent.
  
  

SSDI

• Generally, creditors cannot garnish SSDI benefits. Unsecured creditors cannot use garnishment of SSDI benefits as a method to recover unpaid debts. However, there are three main exceptions to the general rule about garnishing SSDI benefits. First, the IRS can garnish SSDI benefits with or without the debtor's consent; however, the IRS can receive only up to 15 percent per month. Second, custodial parents may garnish a disabled, noncustodial parent's SSDI benefits to recover back child support. Finally, federal agencies owed nontax debt can garnish SSDI benefits.
  
  

SSI

• Under no circumstances can SSI benefits be garnished. That means even the IRS cannot garnish wages of a delinquent taxpayer who receives SSI benefits.