Debt Collection and Social Security Disability Benefits

In the U.S., you can't go to jail for not paying your debts. 

But, not paying your debts has other consequences:

• Credit score. Not paying a debt can lower your credit score. Your credit score matters if you want to borrow money in the future or if you're looking to rent an apartment or home. Banks, property managers, and other companies can look at your credit score to decide if you are financially reliable.
• Utility shut-offs. Not paying utility bills can put you at risk of having your utilities shut off. However, if you are struggling to pay these bills, you may be able to get additional help. Call 211 or contact your local Community Action Agency to find out about utility assistance programs in your area.

When Social Security approves you for disability benefits, you'll usually receive a large "back pay" payment. Back pay is the money you missed out on while waiting to be approved for benefits. Because many people wait years before getting benefits, your back pay can be thousands or more.

It's normal to want to repay the debts you owe with this money. Many people feel guilty about not paying their debts. But before using your back pay to repay your debts, consider your current needs and needs in the coming years. It's important to take care of yourself and your immediate needs first.

Remember, debt collectors can't garnish your disability benefits. Your disability benefits are protected. You also won't go to jail if you don't pay your debts. The worst thing that will happen is your credit score will go down. This may be a necessary trade-off if it means you have enough money to survive.

In some cases, yes. However, it depends on whether you get Social Security Income (SSI) or Social Security Disability Insurance (SSDI). The rules are different for each program. 

If you get SSI benefits, the government cannot take your disability pay to repay child support debt. If you get SSDI benefits, the government can take some of these benefits to pay child support debt. 

The good news is that if you get SSDI benefits, you also qualify for auxiliary benefits. This is extra money you can get on behalf of your child. If you get auxiliary benefits for your child, you can ask that your child support payment be reduced. To apply for auxiliary benefits, call Social Security's customer service number 1-800-772-1213 or visit your local Social Security office.

If you're not sure whether you get SSI or SSDI, here's some ways to check:

• If your monthly payment is $943 (for 2024), you're likely receiving SSI benefits. If you get a different amount, you may get just SSDI or a combination of SSI & SSDI. 
• The best way to know which benefits you're getting is to create a My Social Security account online and download your benefit statement.

Sometimes. It depends on whether you get Social Security Income (SSI) or Social Security Disability Insurance (SSDI). It also depends on whether you have federal ("government") loans or private loans. 

SSI vs. SSDI benefits

If you get SSI benefits, the government cannot take your disability pay to repay student loan debt. If you get SSDI benefits, the government can take some of your disability benefits to pay student loan debt. 

The good news is that if you have federal student loan debt, you may be eligible for student loan discharge ("forgiveness"). You can apply for student loan forgiveness on the studentaid.gov website. 

If you're not sure whether you get SSI or SSDI, here's some ways to check:

• If your monthly payment is $943 (for 2024), you're likely receiving SSI benefits. If you get a different amount, you may get just SSDI or a combination of SSI & SSDI. 
• The best way to know which benefits you're getting is to create a My Social Security account online and download your benefit statement.

Private loans vs. government loans

If you have federal student debt, the government can sometimes take your disability benefits to repay this debt. However, if you have private loans and owe money to a bank or other commercial lender, your disability pay is protected. But you must take steps to protect your benefits from these debt collectors:

1. Open a new bank account. Use a separate bank account for your Social Security disability benefits. Don't put other money in this account. This will help you keep your money away from debt collectors. 
2. Ask Social Security to deposit your benefits into the account. Visit this Social Security page to update your direct deposit information.
3. Notify your bank that the money in the account is from Social Security. You can use this sample letter from the Consumer Financial Protection Bureau (link will download a Word document file). 
4. Look out for letters from debt collectors or courts.  If a debt collector tries to take money from your bank account, they must notify you. Don't ignore these letters. Contact the person who sent the garnishment notice—usually an attorney—and tell them that your bank account only has Social Security disability funds.

Yes, in some situations:

• If you receive Social Security Disability Insurance (SSDI), the federal government can take part of your disability benefits to pay tax debt. The federal government can garnish up to 15% of your SSDI benefits. 
• The federal government cannot garnish your Supplemental Security Income (SSI) benefits if you only receive SSI. 
• The State of Oregon cannot garnish your SSDI or SSI benefits. If the state does try to garnish your Social Security benefits, you can challenge the garnishment.

For more information, refer to the IRS article "Social Security Benefits Eligible for the Federal Payment Levy Program" or the Garnishments page on the Oregon Department of Revenue website.

If you're not sure whether you get SSI or SSDI, here's some ways to check:

• If your monthly payment is $943 (for 2024), you're likely receiving SSI benefits. If you get a different amount, you may get just SSDI or a combination of SSI & SSDI. 
• The best way to know which benefits you're getting is to create a My Social Security account online and download your benefit statement.

What to do if you get a garnishment notice

If you receive a garnishment notice (or any notice) from the government, it's important to respond. The notice will explain your rights, options for responding, where to send your response, and your response deadline.

You should also get legal help. For help with tax debt, you can contact one of Oregon's taxpayer programs: 

• Oregon Law Center Low Income Taxpayer Clinic
• Legal Aid Services of Oregon Low Income Taxpayer Clinic
• Lewis and Clark Low Income Taxpayer Clinic 

But don't delay responding to the garnishment notice while you look for legal help! You should file a response as soon as possible to avoid missing your response deadline. 

No. Debt collectors cannot garnish disability benefits if you take the steps listed in this article to protect your benefits.

Talk to a lawyer for help getting the money back. You can find a lawyer using Oregon's free lawyer referral service.

You should also take these steps to protect your disability benefits:

1. Open a new bank account. Use a separate bank account for your Social Security disability benefits. Don't put other money in this account. This will help you keep your money away from debt collectors. 
2. Ask Social Security to deposit your benefits into the account. Visit this Social Security page to update your direct deposit information.
3. Notify your bank that the money in the account is from Social Security. You can use this sample letter from the Consumer Financial Protection Bureau (link will download a Word document file). 
4. Notify debt collectors the money is from Social Security. If a debt collector tries to take money from your bank account, they must notify you. Don't ignore these letters. Contact the person who sent the garnishment notice—usually an attorney—and tell them that your bank account only has Social Security disability funds.