Wage garnishment is a complicated topic – especially when it comes to garnishing Social Security. If you are receiving Social Security Disability, you may not be elderly or retired. Many young people receive need-based Supplemental Security Income (SSI) for their disabilities, or they use their parent’s work credits to receive Social Security Disability (SSD or SSDI). In either case, your inability to work or provide yourself with a living wage may not convince the government to forgive or defer your student debt, and they may decide to take the money out of your disability payments. For a free consultation on your disability case, and to learn about your rights and responsibilities under the SSI and SSD, talk to an attorney today. Fayetteville AR disability lawyer Ken Kieklak offers free consultations on disability cases.
Can Social Security be Garnished for Student Loans?
Unfortunately for many Arkansans, the federal government’s student loan programs allow wages to be garnished if you are behind on your payments. Wage garnishment means that the government orders whoever pays you (or your bank) to withhold an amount of money, and send it to them to pay toward your outstanding debt. This may occur in several areas, including taxes, child support, or student loans. The government’s power to withhold your paychecks extends to student loan debt.
Wage garnishment should never occur until you default. To default on federal student loans, you usually must miss payments for 270 consecutive days. However, missing even less than this might mean your loans are “delinquent,” but not yet in “default.” Private loans, on the other hand, can have stricter rules and may default after just one missed payment. If you are in default, the loan servicer may decide to start going after your monthly paychecks.
If you were working at a job, your monthly wages would be at risk. Those whose disabilities keep them from working often rely on the Social Security Administration (SSA) to provide them with monthly income, whether through SSD or SSI. If these are the only income you receive on a monthly basis, the government may not hesitate to garnish these wages to pay for your unpaid student loans.
The government limits itself, and only allows up to 15% of your Social Security income to be garnished to pay for loan debt. For other wages, the government can take up to 25%, so Social Security is somewhat protected. It also places hard limits on the amount that can be garnished. In the United States, they cannot leave you with less than thirty hours’ worth of minimum wage income. Since minimum wage in the US is $7.25 per hour, 30 hours of minimum wage is $217.50. Social Security, again, has stronger protections, and you may be entitled to keep at least $750 per month, even through garnishment. This is, however, below the poverty line, and could be a difficult income to live off, especially with difficult healthcare limitations and requirements.
Avoiding Wage Garnishment with Social Security
The best way to avoid having your Social Security garnished to pay for student loans is to speak up early, and work to fix your loan problems. Many loans are expensive, last for a long time, and may be difficult to repay. However, there are plenty of options you may be able to use to avoid going into default.
If you are having trouble paying your loans, work with your loan servicer. You may have options to seek deferment or forbearance, which will put required payments on hold. Especially if you are going through medical hardships, the loan servicer may be willing to have your loans deferred. If you have certain types of loans, and their monthly payments are more than 20% of your monthly income, you could pursue loan forbearance instead. These loans may continue to grow interest, but you may not have to pay them back immediately.
Loans can also be consolidated, refinanced, or rehabilitated to save you money. This may be best discussed with a financial planning attorney or a CPA, but loan consolidation, refinancing, or rehabilitation are options that could save you from default. Consolidating a loan rolls multiple loans into one, which may make repayment more reasonable. Refinancing a loan rolls your loan over into a new loan, possibly saving you money and avoiding non-payment. Rehabilitation is a renewed loan promise that may be more cost-effective.
You may also be able to work on finding an income-based loan repayment plan, which could adapt your monthly payments to your income. Since your Social Security income may be low – just enough to cover the cost of living – this could reduce your loan payments to a very low level.
Arkansas Social Security Lawyer
If you are seeking Social Security disability payments in Arkansas, talk to Ken Kieklak today. Our Fayetteville disability attorney can help you map out your Social Security income and help you apply to get disability benefits you need to take care of yourself if you are unable to work because of a disability. For a free consultation, call (479) 316-0438 today.
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