A debt collector must file a lawsuit and obtain a judgment against you for the amount you owe before they can begin to collect Social Security or VA benefits. Next, in order for your bank or credit union to release funds from your account or prepaid card, the debt collector needs to obtain a court order. This is called garnishment.
Using direct deposit to deposit funds into your account or prepaid card will ensure that your federal benefits are legally shielded from being halted or garnished. To have federal benefits loaded onto a prepaid card or directly deposited into your bank account, you can register at any time.
No, your Direct Express card cannot be garnished. This implies that you cannot use your Direct Express card to make payments to creditors, even if you have outstanding debts. This protection applies to both federal and private debts, including:
- Credit card debt
- Medical bills
- Student loans
- Payday loans
- Utility bills
- Rent or mortgage payments
Here’s why your Direct Express card is protected from garnishment:
- Federal law: The Social Security Act and the Electronic Funds Transfer Act (EFTA) prohibit the garnishment of Social Security and Supplemental Security Income (SSI) benefits, even if they are loaded onto a Direct Express card.
- Direct Express card terms: The terms and conditions of the Direct Express card state that the card cannot be garnished.
However there are a few exceptions to this rule:
- Child support and alimony: In some cases, child support and alimony payments may be garnished from your Direct Express card.
- Federal debts: Certain federal debts, such as back taxes or student loans, may also be garnished from your Direct Express card.
Here are some additional things to keep in mind:
- Two-month protection: Even if your benefits are not protected from garnishment, your bank is required to protect two months’ worth of benefits in your account. This means that even if a creditor obtains a court order to garnish your benefits, your bank must allow you to keep two months’ worth of benefits in your account.
- Direct deposit: If you receive your benefits by direct deposit into a checking or savings account, they are not automatically protected from garnishment. However, you can protect your benefits by using a Direct Express card.
- Prepaid cards: If you receive your benefits on a prepaid card that is not a Direct Express card, it may not be protected from garnishment.
If you are concerned about your benefits being garnished, you should talk to a lawyer or financial advisor. They can help you understand your rights and options
Frequently Asked Questions
Q: What is a Direct Express card?
A: A Direct Express card is a prepaid debit card that is used to receive government benefits, such as Social Security and SSI.
Is there any other use for my Direct Express card besides getting government benefits?
A: Yes, your Direct Express card can be used to make purchases, withdraw cash, and pay bills. You can also use it to get cash back at participating retailers.
Q: Is there a fee to use a Direct Express card?
A: There is no monthly fee to use a Direct Express card. However, there are some fees for certain transactions, such as ATM withdrawals and balance inquiries.
Q: Where can I get a Direct Express card?
A: You can get a Direct Express card by signing up online or by calling the Social Security Administration.
Additional Resources
- Direct Express website
- Consumer Financial Protection Bureau website
- Legal Services Corporation website
Have a conversation with a financial advisor or attorney if you are worried about having your benefits garnished. They can help you understand your rights and options.
Can my benefits be garnished to pay my government debts, child support, or spousal support?
Sometimes the government will garnish Social Security and Social Security Disability Insurance (SSDI) to cover debts like back taxes, federal student loans, and child or spousal support.
Benefits like Supplemental Security Income (SSI) cannot be garnished, not even for debt repayment to the government or for paying child or spousal support.
To inform a debt collector that your Social Security or VA benefits are shielded from garnishment, use our sample letter. The sample letter can be altered to suit your needs; for instance, it can be used to specify payments that are shielded by federal or state law.
As long as I am using direct deposit, which federal benefits are protected?
Money you receive and direct deposit to your account or card from the following government programs is protected:
- Social Security benefits
- Supplemental Security Income (SSI) benefits
- Veteran’s benefits
- Civil service and federal retirement and disability benefits
- Servicemember pay
- Military annuities and survivor benefits
- Federal student aid
- Railroad retirement benefits
- Financial assistance from the Federal Emergency Management Agency (FEMA)