Garnishments
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Are disability payments subject to garnishment?
In most states, State paid disability, private disability insurance payments and most retired disability payments are exempt from garnishment.
However, there are exceptions when you owe back child support or certian taxes. Check with your state attorney general's consumer protection division to be sure about the rules in your state.
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Can the funds in my bank account be seized or frozen by collectors?
The short answer is yes! If you owe creditors, collectors or anyone else money, they can obtain a money judgment and have the funds in your bank account frozen or they can seize them outright. Here is a brief overview of the rules:
Whoever holds a judgment against you can go to someone else who owes you money or is holding money for you and intercept that money through a wage garnishment or garnishment of your bank account.
Anyone who owes you money, or holds money for you, is called the "garnishee defendant" and through the garnishment process, can be forced to reveal to the court how much money they owe you.
Then, the court can require, through an order called a Writ of Garnishment, to force the bank or your employer to pay a certain part of the money owed to you, into the court registry. After receiving payment, the court turns the money over to whoever holds the judgment.
In order for someone to garnish your wages or bank account, they need to know someone who owes you money or where you bank or where you work before they can proceed with a garnishment action. The garnishment process costs a small fee (around $20.00 in most states), plus the costs of serving the papers. You will more than likely have to pay these fees as well.
Note: Only disposable earnings and the amount set by state law can be garnished from wages. Ask the clerk of the court for the correct amount in your state.
State Garnishment Laws
Federal Wage Garnishment Law
Garnishment actions on wages and bank accounts
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I had a written payment agreement with a collection agency but now an attorney is threatening to garnish my wages for twice the amount I am paying the collection agency. Is this legal?
Assuming you complied with the terms of the written agreement, turning the account over to an attorney and the wage garnishment threats may be illegal.
Does the attorney know about the written agreement? If not, have you informed the attorney of the agreement? Are you currently paying at least as much as the federal limit (or your state's limit) on wage garnishment?
I suggest you contact your state attorney general and ask about the laws in your state and your rights concerning this issue. Also, please review wage garnishment information here...
Garnishment Laws
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Is Social Security subject to garnishment?
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 following benefits are exceptions and subject to garnishment:
(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. Section 207 of the Social Security Act provides:
"The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law."
However, section 6331 of the Internal Revenue Code of 1954 (26 U.S.C. 6331) which was enacted into law on August 16, 1954, after the enactment of section 207, gives the Secretary of the Treasury the right to levy or seize for collection of delinquent Federal taxes, property, rights to property, whether real or personal, tangible, or intangible and the right to make successive levies and seizures until the amount due, together with all expenses, is fully paid.
References: SSR 79-4: SECTIONS 207, 452(b), 459 and 462(f) (42 U.S.C. 407, 652(b), 659 and 662(f)) LEVY AND GARNISHMENT OF BENEFITS 20 CFR 404.970 SSR 79-4
Special Note: According to the Social Security Administration's (SSA) website, the SSA recently changed it's rules to allow the collection of overdue Program and Administrative Debts using Administrative Wage Garnishment!
The regulations dealing with the collection of program overpayment debts that arise under titles II and XVI of the Social Security Act (the Act) and administrative debts owed to the SSA have been modified. Specifically, the change establishes new regulations on the use of administrative wage garnishment (AWG) to collect such debts when they are past due.
AWG is a process whereby the SSA orders the debtor's employer to withhold and pay the SSA up to 15 percent of the debtor's disposable pay every payday until the debt is repaid.
The employer is required by law to comply with the AWG order.
These new rules are effective January 22, 2004. (References: SOCIAL SECURITY ADMINISTRATION 20 CFR Parts 404, 416 and 422 RIN 0960-AE92 Federal Old-Age, Survivors, and Disability Insurance and Supplemental Security Income
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What is disposable income?
The term " disposable income" means a variety of things when discussing debts and other issues.
In simple terms, "disposable income" is whatever money you have left after paying all required taxes and national insurances!
Disposable income is after-tax income that is officially calculated as the difference between personal income and personal tax and nontax payments.
In general terms, personal tax and nontax payments are about 15% of personal income, which makes disposable personal income about 85% of personal income.
When applying for certain state, federal and private benefits and protections, the term "disposable income" may change slightly.
For instance, when applying for loans, mortgages, credit cards and veterans home loans, disposable income is that income left over after paying all required taxes, national insurances and all essentials such as food, clothing, and shelter.
Some state and federal assistance programs look at disposable income as "any income available for spending and saving"
Generally, this means money left over after taxes and fixed costs such as rent/mortgage, food, car payments, insurance, etc.)
Disposable income is also defined as the total income that can be used by a household for either consumption or saving during a given period of time, usually one year.
Another way to define disposable income is that portion of an individual's income (wages and salaries, interest and dividend payments from financial assets, and rents and net profits from businesses as well as capital gains on real or financial assets) over which the recipient has complete discretion.
For the purposes of calculating whether you are entitled to federal, state and non-profit legal help and similar services; many states will deduct the following from your income:
a) Deduction of a certain amount depending on how many dependent children you have,
b) Tax and National Insurance.
c) Maintenance you are paying to your wife/husband of former wife/husband or a child or relative, (who are not members of your current household).
d) Housing costs, for example mortgage or rent, (less any housing benefit). This also includes council tax, water rates, insurance premiums and other costs associated with where you live. There is a maximum figure of £545 per month if you have no dependents. Otherwise the full value of your housing costs can be taken into account.
e) Employment related expenses, for example travel costs. This figure is a set of £45 per month.
f) Childminding charges, these are only deductible if you are receiving a wage or salary and actually pay private childminding charges. Deduction can only be made for children 15 or under, (unless they are disabled in which case there will be no limit on age).
g) If you are in receipt of certain state benefits on top of your income then these will be disregarded, (examples are disability living allowance, invalid care allowance, council tax benefit, housing benefit, payments out of the social fund etc.).
Disposable income was also known, in previous generations, as discretionary money. The bottom line is you should always ask how your disposable income is being figured.
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