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Amber E.
Amber E., Attorney
Category: Legal
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Experience:  Experienced practitioner in areas of Divorce, Custody, Social Security, and Contract disputes.
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Can there be a lien on social security disability?

Resolved Question:

I have finally received Social Security Disability after 5 years (SSDI) of hearings and delays. I have received most of my six years of arearages. I have read that only the Federal government can put a lein (or levy?) on it. I am in California, and the Franchise tax Board has sent a lien to my bank, where I have a SS disability deposit funds only account set up. FTB says they can take any funds if it has been on deposit for more that 2 months. (By the way, the bank received notice before the account had even existed for 2 months). So, who really can attach and get my SS disability funds? I have no other income at all. What laws from federal and CA state apply? Thanks.

Submitted: 9 months ago.
Category: Legal
Expert:  Amber E. replied 9 months ago.

Q. So, who really can attach and get my SS disability funds? I have no other income at all. What laws from federal and CA state apply? Thanks.

Generally, no one. Social Security benefits are exempt from levy, garnishment, etc. from all creditors. The exceptions are that the Secretary of the Treasury may make levies for the collection of delinquent Federal taxes and under certain circumstances delinquent child support payments, and likewise individuals may enforce a child support or alimony obligation. The Social Security website has the relevant law available HERE.

 

Q. FTB says they can take any funds if it has been on deposit for more that 2 months. (By the way, the bank received notice before the account had even existed for 2 months).

This simply isn't true. What the creditor may be referring to is the two month "look-back" period, but it is not what they are telling you. Your bank is required to protect up to two months of these benefits that are directly deposited into your account - rather than simply freeze the entire account to investigate the levy or garnishment order they receive, which is what they typically did before.

The bank's responsibility is to review the account to determine whether a benefit payment was deposited, then calculate and establish the protected amount for the account (which may be the entire account balance, if the entire amount is a social security benefit). Then, the bank must notify both parties of the amount protected.

This protected amount, calculated and established by the bank, is considered to be exempt from levy or garnishment under the law. In some cases, this automatic protection doesn't occur, such as when the federal benefits were deposited more than two months before the bank received the order. For any funds in an account in excess of the protected amount, the bank will proceed with its customary procedures for handling a garnishment order, including the freezing of funds.

However, this DOES NOT mean that the creditor will be given the money or can just take those funds because they are frozen. The money would still be exempt from levy or garnishment, but you may have to tell the court or your creditor that you think money in your bank account is exempt. And if they take the funds anyway, then you may have to contact a local attorney to take action against them to get that money back. And if you have to sue, you may be entitled to costs, expenses and attorney's fees as well. Some banks will supply you with the contact information for a local free attorney or legal aid service, but you can also find one near you at the Legal Services Corporation website HERE.
Lastly, to avoid these kinds of problems, another way to protect federal benefits is to use the Direct Express card. Direct Express is a prepaid debit card on which federal payments, including Social Security, can be deposited. Benefits paid this way cannot be frozen or garnished unless they fit the above noted exceptions (e.g. child support or alimony).

 

Amber E., Attorney
Category: Legal
Satisfied Customers: 1382
Experience: Experienced practitioner in areas of Divorce, Custody, Social Security, and Contract disputes.
Amber E. and 4 other Legal Specialists are ready to help you
Customer: replied 9 months ago.

In answer to you question to me

Did you have this account before you received the ssa payments? And is
this ssdi that you are

I opened it explicitly for Social Security Disability Funds.
The account Purpose is even so name. Social Security Disability Funds
Deposit only

It was opened with a zero balance.

First SSDI payment was received 21 days later (SS disability payment).

Only SS funds have been deposited, besides an
interest payment the bank added (saving account)

There did not seem any other way to respond to your question,
beside rsponding as an email.

Thanks.

Expert:  Amber E. replied 9 months ago.
Okay, very good. I just wanted to make sure of that. People sometimes run into problems when they "co-mingle" or mix funds from different sources in the same account. Based on the information you've provided, you shouldn't have any problems. But, if issues arise and you do have additional questions, feel free to come back at any time with questions.
Customer: replied 9 months ago.

Hello Amber,

You wrote, "People sometimes run into problems when they "co-mingle" or mix funds from different sources in the same account. Based on the information you've provided, you shouldn't have any problems."

I have not added any other (non SS disability) funds to the account, but I realize now the the bank made a deposit of interest acrewed by my SS disability saving account. Will that create a problem?

Thanks

Expert:  Amber E. replied 9 months ago.
It should not, because the money is still derived from the social security benefit.
Customer: replied 9 months ago.

Thanks

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