Responsible Americans make detailed plans to work, save and build a nest egg until they reach a desired retirement age to ensure they have sufficient money for a secure future. However, many plans are cut short by job elimination, company downsizing or unexpected hardships. Many are being forced into retirement before they have a chance to pay off all their old debts, causing an unexpected budget dilemma. Recent estimates are not looking good for many Americans over 50. Its estimated that American over the age of 50, carry an average of $8,250 in credit card debt. In regard to retiring with debt, many wonder if collectors will be able to go after social security benefits to collect debt.
Status of Seniors on Retirement
Only 30 percent of households are prepared for retirement by the age of 62, the earliest that Social Security can be collected, according to the Center for Retirement Research. They also report that a majority of those between the ages of 50 and 70 plan to work after they retire, with less than 10 percent planning to work full time. With so many leaving their main careers with large amounts of debt in tow, more retirees are finding it necessary to work more hours in whatever new field they can find employment. If they remain employed to the age of seventy, 86 percent have high expectations of being prepared to enjoy their retirement.
The danger for seniors who find themselves forced out of the work force before they are fully prepared is that they will spend more on credit for general living expenses, including groceries, utilities and mortgages and risk falling behind in making payments. While many people are able to stay on track with a lower income, those who can’t make the transition may find that their creditors have reported their delinquencies to the credit reporting agencies; or even worse, they have sold the bad debt to a collection agency or filed a lawsuit in an attempt to collect. As a result, their credit score will take a dive and any legal judgments could mean that even limited wages may be garnished and a lien may be placed on their estate.
Safeguard Your Social Security
People who depend on their Social Security benefits often wonder if their checks are vulnerable to garnishment for unpaid debts. The law protects your investment made to the government program, except in a few situations – unpaid taxes and child support. SS benefits cannot be seized through a levy against your wages, property or other legal efforts, no matter why you receive SSI checks, i.e., disability, survivor’s death benefit, retirement, etc.
To give added support to protect SSI benefits, the U.S. Treasury and four other federal agencies jointly issued a final decision requiring banks and other depository institutions to automatically protect up to two month’s worth of their depositors’ SSI and other specific federal benefit deposits against depletion, effective June 28, 2013.
If you rely on your Social Security checks and use direct deposit, you’ll need to be careful of one way these funds may be vulnerable. If a civil court judge, issues an order to freeze your bank accounts, any money in the frozen account will be unavailable to you until the court proceedings are completed. While it’s true that your Social Security funds are exempt from collection restitution, it will take some time to straighten out the situation of having your personal savings mingled with your Social Security deposits.
One way to safeguard your benefits is by having your SSI payments deposited into a separate bank account solely for this purpose. Another option is to apply for a pre-paid debit card specifically designed for Social Security and Supplemental Security Income recipients who want to avoid using a bank. This way you can have your benefits directly deposited onto one of these cards.
Don’t be fooled by a debt collector who pressures you to pay up with whatever resources you may have and tries to convince you to use your SS check to cover the debt. It’s not your legal responsibility to use your SSI benefits, according to the law.