Laws have long maintained that Social Security benefits are protected from garnishment by creditors looking to collect on a debt. However, a recent appellate court decision upheld that creditors cannot attempt to seize these wages from bankruptcy consumers.
Protecting The Poor
Last week, the Ninth Circuit Court of Appeals handed down the decision that Social Security benefits are off limits to creditors. The National Consumer Bankruptcy Rights Center had previously filed an amicus curiae brief requesting Congress to review the directive related to these types of benefits. Citing their importance for the elderly and disabled, the brief aimed to confirm the protection under bankruptcy laws that would prevent creditors from garnishing these funds in Chapter 13 cases.
The decision came as a joint ruling with the Fifth and Tenth Circuit courts saying that debtors should have the right to exempt these funds from a source of income in a Chapter 13 plan. Ed Holtz, the President of the National Association of Consumer Bankruptcy Attorneys (NACBA), said: “We are gratified that the court recognized that Congress wanted to protect these benefits from creditors, as it has done historically since the Social Security Act was passed.”