Many who struggle with personal debt right now look to a light at the end of the tunnel. Those anticipating a healthy social security check throughout retirement may feel slightly more secure in spite of a tanking business, lost job, and evaporated retirement accounts. Todd Ossenfort at CreditCards.com addresses the concern of one man: can social security benefits be garnished as a result of default on credit card debt payments?

Ossenfort’s answer to that question has both an upside and a downside. The answer, it turns out, is both yes and no, or more accurately, no and yes. Social security income cannot be garnished to satisfy outstanding credit card debts. It can be garnished, however, to fulfill debts owed to the government, like unpaid income taxes, child support, or alimony obligations.

The catch to social security income is to keep it in a separate bank account – i.e., one that does not have commingled money with other income sources. If the social security check were deposited to a bank account that includes income deposits from a small business run on the side, for example, then the creditors can come reaching for those funds through the process of garnishment. In short, while creating and maintaining a separate account for social security income adds complexity to one’s financial picture, it is well worth the trouble in order to protect it from confiscation. Finally, make sure to incorporate any changes in your personal finances to your debt reduction plan, budgeting, or other system you’ve set up to manage things.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs.  DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.

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This entry was posted on Tuesday, May 5th, 2009 at 12:20 pm and is filed under Credit Card, Credit cards, Lending Industy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.