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Can a creditor take my VA benefits or Social Security?

You may already know that when a creditor sues you in Illinois or elsewhere, the entity will be able to secure the money owed through practices such as garnishing wages. If you currently receive income through Social Security or Veterans Affairs benefits, you may be understandably concerned about losing that money to a debt collector.

Fortunately, as the Consumer Financial Protection Bureau points out, in most cases, a debt collector cannot garnish Social Security or VA benefits that you had direct deposited into your account or earned on a prepaid card over the last two months. A bank is required to protect those funds.

You should be aware that the bank may freeze money received prior to the two-month timeframe. For example, if you receive $500 a month in Social Security benefits and have $2,500 in your account, the bank could freeze $1,500, but must enable you access to that $1,000 from Social Security.

There are a few situations in which Social Security benefits could be garnished. As an article in U.S. News & World Report notes, if you have government debt, those funds could be taken to satisfy the amount owed. Government debt could include items such as the following: 

  • Child or spousal support
  • Student loans made through the federal government
  • Income taxes
  • Mortgages that are federally backed

The good news is that only 15 percent of your benefits can be taken each month. Illinois protects Social Security and Supplemental Security Income from garnishment if you earn less than $371.25 a week in disposable income.

While this information may be useful, it should not be taken as legal advice.

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