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The IRS and those holding your school loans can take aim at your benefits.

You have worked your whole working life for Social Security in your retirement and it is relatively safe from creditors, with a few exceptions, according to Yahoo! Finance in “Can Creditors Come After Your Social Security Benefits“.

Personal loan payments, credit card payments, or medical bills are usually not able to take your Social Security benefits. However, there are some exceptions you’ll need to know about:

  • The IRS will not blink at taking up to 15% of your benefits, if your taxes are not paid.
  • If you owe on student loans, the loan companies can come after your Social Security benefits, even if the debt is decades old.
  • The same is true if you are behind on either child support or alimony payments.

As long as your outstanding debt is not tax-related, the first $750 of your benefits is protected from being garnished. However, if you’re behind on child support or alimony, you could lose more than 50% of those benefits.

There are steps to take if debt is an issue. First, if you owe money to the IRS, contact the local IRS office to work out a payment plan. They will almost always work with people to reach an agreement on an installment payment plan. This step will avoid having your benefits garnished.

If you’re behind on student loan payments, reach out to the lender and work out an arrangement. If you can prove that your financial situation is dire, you might be able to come up with a deferred payment plan or change the repayment schedule.

If things are really bad, consider filing for bankruptcy. If you do, realize that not all your debt will be dischargeable, including the IRS and school loans.

This might be a situation where a bankruptcy attorney or a debt settlement firm is needed. Be very cautious about working with a debt settlement firm to be sure that they are credible and trustworthy. The firm or the attorney will be able to help negotiate the debts. Remember that the ultimate goal of any creditor is to get paid, and sometimes getting paid half is better than not being paid at all.

Reference: Yahoo! Finance (April 27, 2019) “Can Creditors Come After Your Social Security Benefits

For more information on asset preservation and estate planning, please visit my estate planning website.

Mr. Amoruso concentrates his practice on Elder Law, Comprehensive Estate Planning, Asset Preservation, Estate Administration and Guardianship.