Many people try to enter retirement with as little debt as possible, but that isn't always a viable options. Sometimes, debts actually occur in retirement, especially when medical issues arise. For those who rely on Social Security as a source of income, whether or not debt collectors can take these payments can be a concern.
The good news is that most creditors can't garnish or otherwise access your social security payments. The Social Security Act actually stops private collectors, such as those associated with a credit card company or a bankruptcy, from taking social security funds from your bank account.
Some government agencies aren't limited by the act, though. Social Security benefits could be garnished by federal agencies looking to satisfy debts related to student loans, mortgages with federal backing, income taxes or alimony or child support that is ordered by the court. In most cases, these garnishments are limited to a certain percentage, and creditors must leave at least $750 a month for your use. Income tax debt isn't limited by these rules, and child support payment limitations depend on state laws.
You do have to prove that income is Social Security-related for it to be exempt from private debt collection efforts. If you receive your benefits via paper check, which is rare these days, it can be more difficult to prove. When money is direct deposited from the government, it's easier to show that your income is from Social Security.
Even if your income is exempt, aggressive debt collectors might still attempt to access it. Understanding your rights and how to seek debt relief legally can help you protect your assets, including Social Security payments.
Source: US News and World Report, "Is My Social Security Safe From Debt Collectors?," Maryalene LaPonsie, Sep. 17, 2015