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Loren, Attorney
Category: Legal
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Experience:  30 years experience representing clients.
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I am getting ready to go on Social Security, but still have

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I am getting ready to go on Social Security, but still have two debts that I will be unable to continue paying on. Is sthere any recouse for me?
All social security benefits are exempt from attachment by creditors. If you have no assets other than the social security benefits you may be considered judgment proof or uncollectable by the creditors. They would have no choice but to write off the debt.

If you are referring to secured debt, such as a mortgage or car loan, you will need to contact the creditor and see if you can negotiate some sort of settlement that would credit you with any equity you might have in the collateral.

Finally, depending on the circumstances, you may want to investigate filing for bankruptcy to discharge the debts completely.

Good luck. I hope it turns out ok for you.
Customer: replied 6 years ago.

Thank you.


One of the debtors is for a car that I had to return to the lender due to impending blindness due to diabetes. This lender has threatened toreport this to the IRS and said that the IRS would make me pay taxes on the amount owed./


Can the IRS do this>

Technically, the amount of the forgiven debt can be reported as income. I'm not sure how they would calculate it on a car loan. Generally, Social Security benefits are exempt from execution, levy, attachment, garnishment, or other legal process, or from the operation of any bankruptcy or insolvency law. The exceptions are that benefits are subject: (1) to the authority of the Secretary of the Treasury to make levies for the collection of delinquent Federal taxes and under certain circumstances delinquent child support payments; and (2) to garnishment or similar legal process brought by an individual to enforce a child support or alimony obligation.

The IRS can take 15% of your social security retirement benefits under the automated Federal Payment Levy Program (FPLP); however there is no such restriction on the non-FPLP (manual) levies. An exemption amount for reasonable living expenses may be requested, or be applied, to any levies.

So the short answer is yes, the IRS can reach a portion of your social security but you would get advance notice a long time before it came to that (if at all) and an opportunity to make other arrangements.

I do not think you need to worry about it at this point.
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