It’s a tiny monthly Social Security check, but you’re way behind in paying the huge medical bill that you don’t know how to proceed. You’re getting calls from creditors and anxious. Are they able to garnish the amount of your Social Security income?
If you’re a low-income person or have low income, you may be “judgment evidence,” a term indicating the status of a person who is protected by Social Security benefits and certain other sources of income from the majority of creditors. However, many people aren’t aware about federal laws that offer protection for veterans, seniors with low incomes and those with permanent disabilities, and many others. Here’s what you need to be aware of if you’re in debt.
What is the process of making judgment the proof?
If you’re in the lower income bracket and have only a small amount of cash reserves or assets Certain kinds of income, including Social Security benefits, cannot be taken away from you to settle your obligations (with certain exceptions). As they are judgment-proof, the income sources you earn are safe and creditors cannot legally take your bank account and garnish it to collect any type of debt. The income sources that are exempt from garnishment are:
- Social Security
- Disability (SSI)
- VA benefits
- 401(K)
- The Individual Retirement Account (IRA)
- Pension
- Unemployment insurance
- Public assistance
Lawmakers created these protections so that seniors and other financially-vulnerable consumers can prioritize paying for their basic needs even if they have unpaid consumer debt, such as credit card debt, a personal loan, or unpaid medical bills. Also even if you’re in the process of paying any debt the creditor (or an agency for collection working for the creditor’s behalf) can’t forcibly seize your income exempted when you’re judged to be judgment proof in the same way as an employee who is working on a payroll.
Exemptions based on the nature of debt
If you’re judgement proof but there are specific types of debts that do not fall within the legal protections provided by law, and your income exempted from taxation could be garnished in order to settle the debt you have to pay. The types of debt that fall under this category are Federal student loans child support unpaid or alimony, as well as money due by the Internal Revenue Service or other federal agencies. In these cases it is possible that a collector will get a garnishment and seize the income that is protected.
Find out the time limit in your state.
Every state has the time limit (time time limit) that allows creditors to sue you to collect for a debt, typically between 6 to 10 years. However, it is contingent upon the state you live in and the kind of debt that you owe. Even if the time expires the creditors might still attempt to recover.
A judgment-proof status does not be a safeguard for secured debt
Car loans and mortgages are known as secured debts. This means that they’re backed by collateral (the vehicle or the house) and the lender is able to take possession of or take over the property if you’re in debt on the loan used to buy or refinance the loans.
If you do own a house in full or even you could be subject to a “judgment lien” could be placed on the property to ensure that should you ever decide to sell the house (or your descendants do) the proceeds will be used to pay off any other outstanding debts before your family or you are able to collect any remaining.
Although, having equity in a house does not necessarily mean it’s going be taken away from you in the event that you have a debt to someone especially if you’re a senior. There are exemptions, and it’s crucial to find out more about the rights you have within your particular state.
Guidelines for balances in bank accounts in the event that you’re judge proof
If you’re able to show a the judge’s proof, you’re permitted to keep a certain amount of funds in your account at the bank. The amount you are protected from creditors is double what you receive in monthly income, but not more than. For instance, if you are receiving the monthly Social Security retirement benefit of $1500, then $3,000 of your bank account is safe from creditors. This is even if a portion of it comes from an alternative source such as the gift.
It’s crucial not to go over the limit of the insured amount. If your account at a bank exceeds the amount at any given moment, you could be subject to having a lien placed on your account. This means that the bank may close your account in the event of an unwritten request from the creditor. Be aware that creditors are able to be able to garnish income that isn’t protected. Do not try to conceal assets. It could backfire, and cause negative consequences.
How can I get help with personal debt issues
Let’s suppose you’re a elderly person who is living in a home that is Social Security, and you are faced with a medical bill that you’re unable to pay. The debtor keeps calling and harassing you, causing anxiety and stress. Here are some steps you can follow:
- Apply for financial assistance and “charity treatment”. Hospitals and medical professionals will typically lower or eliminate charges for individuals who are income-qualified, but it is important to act immediately when you receive the invoice. Apply for financial aid and fill it in completely and send it back with all required documents. If you require assistance go to Dollar for A charity which helps patients reduce medical debt.
- Send an HTML0 cease and desist letter to end the phone calls. You can find templates on the internet. If you are sending the letter, make sure you send it via registered mail, and get an acknowledgement of receipt to ensure you can prove that it was delivered. Remember that sending a letter can increase the speed of legal action taken of the lender. Don’t be afraid should you’re being accused of being sued.
- Contact us for assistance. Nonprofit credit counselors such as MMI can offer recommendations for local Legal Aid agencies. You can also contact 1-2-1-1 to request legal assistance in your region. In addition, non-profit organizations like HELPS offer free or at a low cost assistance to those with incomes that qualify. They can assist you to know the rights under the law. rights and obligations in relation to collections of your debts.
Get advice on how to tackle the financial issues
There’s no need be waiting until you’re in legal trouble to seek assistance. If you’re facing debt that’s too expensive Get help today with a non-profit credit counselor such as MMI. Our help is completely absolutely free and confidential. The counselor might be able to assist you reduce your costs by utilizing needs-based community referrals that can make your the process easier to afford. Do not put off seeking assistance.
