IF I OWN MY OWN BUSINESS AND HAVE A DISABLING CONDITION THAT PREVENTS ME FROM TECHNICALLY "DOING WORK" WITHIN MY BUSINESS, AM I ELIGIBLE FOR RECEIVING SOCIAL SECURITY DISABILITY BENEFITS?

Protecting Social Security Disability Benefits from Creditors

Until recently, if you received Social Security Disability benefits, you could lose any money you deposited in a bank account if a debt collector issued a garnishment order to your bank. This loophole has come as a surprise to many New Yorkers who rely on their SSDI benefits to make ends meet, as many people believe that federal disability benefits are protected by law from creditors.

This is true, to an extent. Creditors are not allowed to take your Social Security disability income to satisfy a debt, however there are no rules about what happens to your federal benefit monies once they are deposited into a bank account.

Before new rules were released, debt collectors could ask banks to freeze customer’s accounts to pay creditors. What was happening was that seniors and disabled individuals were depositing their Social Security or other government benefit checks into their bank account, and creditors were using this loophole to access those funds.

This was leaving people with no other way to pay bills or support themselves. Fortunately, lawmakers have finally taken action. The Treasury Department recently issued rules that require banks to protect federal benefit monies deposited up to 60 days before a garnishment order is received.

According to the new rules:

Banks must send you a notice explaining what is happening. The notice must include how much money in your account has been protected, how much money was frozen, and how to contact the creditor, the court, and the bank.
While the protected amount may not be used to pay creditors, the bank may take overdraft charges, garnishment fees or other fees from it.
Protected income includes Social Security benefits, Supplemental Security income benefits, Veterans Administration benefits, Federal Railroad retirement benefits, Federal railroad unemployment and sickness benefits, Civil Service Retirement System benefits and Federal Employees Retirement System benefits.

According to an attorney with the National Consumer Law Center, these new rules will “stop banks from illegally freezing Social Security, SSI and veterans’ benefits to satisfy garnishment orders from debt collectors,” and “This is a critical protection for seniors and others who depend on federal benefits to pay for food, medicine and shelter.” We could not agree more.

Need Social Security Disability Benefit Help?

Please contact the skilled, compassionate New York SSDI lawyers at Markhoff & Mittman today to discuss how we can help with your initial disability application or with a disability application that has been rejected.

Markhoff & Mittman, P.C.

14 Mamaroneck Avenue

Suite 400

White Plains, NY 10601

Toll Free: (866) 205-2415

Phone: (914) 946-1452

Fax: (914) 946-0810