For millions of Retirees in the United StatesThe Social Security check is the foundation of your monthly budget. Given ongoing inflation and the high costs of housing, food, and medicine, any reduction in this income is cause for concern. The crucial question is clear: Can creditors keep part of it? social security collect overdue debts?
As reported CBS NewsThe general answer is that Social Security benefits are protected from most private creditors.
However, This protection is not absolute. Federal law provides for special exceptions that allow certain agencies to withhold a portion of the monthly payment to pay off certain debts.
One of the main cases is federal tax debts. The Internal Revenue Service (IRS) has the authority to withhold a portion of Social Security if there are tax delinquencies.
You can’t keep all the winnings, but provide a monthly discount until the debt is paid off. The percentage depends on the taxpayer’s personal situation and the amount owed.
Another relevant exception concerns delinquent federal student loans. Many older adults still have debt from their own college education or from Parent PLUS loans applied to finance their children’s education. If those loans default, the federal government can garnish up to 15% of monthly Social Security benefits, which has significant implications for those living on a fixed income, he explained. CBS News.
Child support or maintenance obligations also qualify for direct discounts. In these cases, government agencies can request this from the Social Security Administration withhold part of the payment until the entire amount owed is paid. Unlike other garnishments, these withholdings can be higher and vary depending on the current court decision.
There is also the possibility of discounts for improper payments to federal agencies. If an agency, including the Social Security Administration itself, determines that a person has received excessive benefits in the past, it may reduce future payments to get the money back. In these situations, the agency must notify the beneficiary in advance and submit objections or requests for reduction due to economic difficulties.
Outside of these exceptions, private creditors, such as credit card issuers, banks or debt collection companies, You cannot garnish Social Security directly. Nevertheless, accumulated debts put a strain on your monthly budget and lead to financial stress.
As I said CBS NewsIf you’re worried your debt will impact your retirement income, you have a few alternatives. For federal student loans, income-driven repayment plans or hardship options can prevent default and prevent foreclosure. For tax debts, the IRS offers Installment plans and comparison programs that can stop withholding tax.
Although Social Security enjoys broad legal protections, understanding the exceptions is critical to anticipating potential rebates and protecting vital retirement income as much as possible.
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