Frequent Mistakes that Could Put Your Social Security at Risk
Your social security is an important asset that you can help support you after you retire – or after you have finished working due to disability. But social security rarely pays enough for you to meet all your expenses. And if something unexpected comes up, you may not have the money you need.
You may find yourself in trouble with debt at some point, and you may be relying on your social security income to provide basic support. However, if your debt problems get to the point that your creditors are trying to garnish your bank account, your social security might be at risk. You may be able to file for bankruptcy to stop the garnishment, but if you don’t take preventive measures or don’t act quickly enough, you may not be able to protect some of that social security income.
Here are frequent mistakes that could put your social security at risk:
Putting Your Social Security into a Bank Account with Other Funds
You likely deposit your social security funds into the same bank account that you use for all your money. Social security is a protected source of income. So, if your creditors get a judgement allowing them to garnish your bank account or wages, they are not supposed to be able to take your social security income. The trouble is that if you have been putting your social security into the same account as your other money, there’s no way to prove what money is social security and what money is from other sources.
The only thing you can do to protect your money is to put it into a dedicated account. If the only money you are putting into one account is social security money, there can be no question about its source, and it will be protected. You can work with a Gilbert bankruptcy attorney to put a stop to the garnishment, but the best preventive measure you can take to protect your social security is to keep it in a dedicated account.
Not Direct Depositing Your Social Security
One way you can show how much social security has gone into the account is by setting up direct deposit. Then you will have an electronic record of every amount that has gone into the account and when it hit the account.
Setting up direct deposit also protects up to two months of your social security income. The U.S. Treasury requires that banks protect up to two months of deposits from levies and garnishments. Therefore, even if you respond quickly to the original Writ of Garnishment and the creditors still try to seize funds, you will have some protection under federal law.
Solutions through Bankruptcy
Of course, the best protection against garnishment of your bank accounts and wages by creditors is to talk with a bankruptcy attorney in Mesa about your options for debt relief under Chapter 7 bankruptcy and Chapter 13 bankruptcy. Filing for bankruptcy will issue an automatic stay, which will put an immediate halt to any collection activity or legal proceedings.
That doesn’t mean that your creditors will never be able to seize your assets, but it does mean that you’ll be given time to explore your options through bankruptcy. You may be able to file for Chapter 7 bankruptcy and have all of your unsecured debts discharged, or you may be able to restructure your debt under a Chapter 13 bankruptcy debt repayment plan. Your Gilbert bankruptcy attorney will help you understand how each option would benefit you best, dependent on your financial circumstances, such as what kind of debt you owe and how much income you have.
Call My AZ Lawyers to learn more about the bankruptcy process and how it may help you get out from under overwhelming debt. Our bankruptcy lawyers will review your finances and talk to you about your goals to help you determine the best course of action. We may be able to help you put an end to garnishments, stop foreclosure, and more. Our bankruptcy law office serves clients throughout Mesa, Glendale, Tucson, and Phoenix. Call us today to schedule a consultation with a bankruptcy lawyer and explore your options for debt relief.
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 85392
Office: (623) 469-6603