The Garnishment of My Mother’s Social Security for the Student Loan Just Stopped. – Erin

“Dear Steve,

I’m wondering if anyone in your organization has knowledge of a process change regarding student loan/social security garnishment.

My elderly mother lives off of her social security income and for the past few years it has been garnished for repayment on a student loan she co-signed for my brother about 20 yrs. ago. Two days ago she was contacted by an outside credit agency, the rep. told her that the debt would no longer be handled through social security and would instead be handled by the collection company he works for. Her most recent check no longer reflects the garnishment. The rep also mentioned that if she made another series of payments she may be eligible for a break from payment for awhile.

I realize this situation is not the type you typically advise on, but I was hoping you may have some thoughts on it.

Has there been any change that you know of to the student loan/social security garnishment process, or do you know of any other cases where others have had a similar experience? Also do you have any advice for us on how to proceed?

Thanks so much for all you’ve done and all you do!


Dear Erin,

It sounds like the government outsourced the collection and this may just be a temporary break from the garnishment.

It’s certainly worth evaluating what the collection company may be offering.

Ironically the garnishment may be subject to a lower payment since their are limitations about just how much can be garnished.

I’d encourage to have an open dialogue with the collection company and see what they may be offering. I would be guarded though about disclosing any assets your mother may have. Collectors are not all the enemy and often they can help to facilitate a solution that their client has authorized.

I have to ask, is there a reason your brother isn’t helping with this?

See also  Can My Social Security Be Garnished for Student Loans if it is Already Being Garnished? - Deborah

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

7 thoughts on “The Garnishment of My Mother’s Social Security for the Student Loan Just Stopped. – Erin”

  1. This may actually be why the garnishments stopped.  If her only income is Soc Sec and it is electronically deposited, as long as she does not accumulate more than 2 months worth in her account, it can’t be touched.  She should stop paying and give them the brother’s contact information.
    “But starting May 1, 2011 new protections are in place for those least able to have their accounts frozen and their funds unavailable for 4 weeks or more. Federal benefits that are directly deposited into an account via ACH from Social Security; Supplemental Security Income (SSI); Veterans Administration benefits; Federal Railroad retirement, unemployment or sick benefits; or Civil Service and Federal Employee Retirement benefits cannot be frozen under the new rules and will be available for use by the debtor.
    For an account that receives funds in this electronic manner, only those funds in the account that exceed the total of two months electronic deposits of protected public benefits will be subject to freezing for the garnishment.  Some states allow even greater exemptions to protect the assets of recipients of public benefits who are on fixed incomes.”

      • Hi,

        I owned my own business for 18+ years when I was diagnosed with (supposedly) a fatal brain tumor. I had no choice but to sell my business (fast) and I held the mortgage. The new owners were in the process of securing a loan to payoff an SBA loan I was still paying on but 7 months after the sale they killed the business (very arrogant) and stopped paying me. I foreclosed on them but it took over 4 years and by then they had liquidated everything so I lost out on over $420,000

        I started receiving Social Security Disability and for the past 2+ years my check has been garnished 25% to payoff the SBA loan. I tried to negotiate a one-time payoff about a year ago but they never responded and when I would call they would tell me it is still in the process but I can never get a straight answer.

        Based on the payments the loan would not be paid in full until 2017 but the payment was not deducted from my last direct deposit. I don’t know what to think of that and I don’t want to raise any flags by looking into it.

        I was just wondering if it’s possible for them to double up the amount of the garnishment once they realize it has stopped (if they realize)?

        The amount they take is equivalent to 25% of my monthly benefit. My wife runs her own business and she has a line of credit and we were considering paying the balance with her line of credit but now I’m not sure if we should just leave everything as it is?

        I don’t even know if they are charging me interest on the loan balance but I do know that SS charges $15 per month for processing the garnishment, it is taken before my check is even issued. At first I wasn’t concerned too much about the situation because I was expected to survive this long but I plan on living to at least 150 : )

        Any advice would be greatly appreciated.

        Thank you!

        • I think it may be coincidental that the amount being garnished is 25% of your benefit. The amount that is allowed for offset on Social Security benefits to repay federal debts like SBA loans is 15% or everything over $750, whichever is greater. So if your actual benefit amount is $1000 then they could deduct $250 as it is the amount over $750 but greater than 15%. These offsets are renewed every 12 months. It could be their decision in response to your petition was to just not renew the offset and forgive the debt. Or it may just be a delay in the renewal. Or they may have come to realize that you have better assets to attach. Either way, while sometimes with debts it’s can be better to let a sleeping dog lie, in this case since it is a federal debt and will never go away unless some action occurs. For example, if you co-mingle funds with any other source of income in the account where your social security is direct deposited, your protection on the seizing of the full amount of your check is lost. So if they determine that your benefits are being deposited into an account where you also deposit the odd dividend check or your wife’s income of any kind, the rule that says the equivalent of 2 months worth of benefits are protected in the account would be waived any balance in the account is available to seize. So let’s look at my example. You state at the rate of 25% of your benefit each months is will take until 2017 to pay the account in full. So my example of all funds over $750 in the benefit on a $1000 benefit would mean a balance of approximately $9 to $10 K on the loan. If you are co-mingling funds and other moneys besides your $1K direct deposit are sent to that account then ALL funds in that account can be subject to seizure. So if I were acting as the collector of your 9K debt and saw that the renewal on the offset was coming up but realized from your petition that you have a shared account with your spouse I might not renew the offset and just file a regular garnishment for your account on the 3rd of every month, seize all the funds ($1K plus what ever the amount of the co-,mingled funds are) and clear out the debt in less than 9 months instead of 3 years. Or they might decide to file a federal lien against your home in anticipation of being repaid when your assets go through probate (sorry to be blunt – hope you make it to 150 ;)). In any case it’s better to know their plan than not know their plan. I would recommend contact because then you will either have the relief of knowing the feds have forgiven the debt (expect that Form 1090 in the mail for tax time showing the forgiven amount as income) and prepare for the tax implications; or you will avoid offering a settlement (that just shifts your debt load) which the feds will accept on a debt they might have already decided to forgive; or you will know that the feds have decided to attach your bank accounts and you will not have the problem of issuing payments and checks on the funds you thought were in the account only to have them returned NSF by your other obligations such as mortgage or utilities when the feds freeze the account; or you will be able to make effective estate plans so that your loved ones don’t have to deal with a “mystery” debt from the government in 150 (;)) years in order to settle your affairs. My recommendation is to inquire. The best info would be forgiveness or it gives you the opportunity to ask to address the issue in a way that works best for you…continue the offset or offer a 50% or less settlement or segregate your social security funds into their own account to maintain the protection offered on treasury issued benefits.

  2. Thanks for your quick response Steve. The rep we spoke to does seem to be willing to work with her. To answer your question, no, there is no good reason she’s the one shouldering this debt or this problem.
    Thank you again & Happy Holidays!

    • In that case, I’d just expect the garnishment to begin again at some point in the future. But, don’t be shocked if the balance due suddenly jumps by as much as 25%. The collection companies can tack on their fees to the balance of the loan due.

      But it’s probably a moot point since it is unlikely she will ever repay the loan anyway.

      Unless there is some reason that would prevent your brother from contributing something to help his mother on this, it’s a disgrace.

  3. Thanks for your quick response Steve. The rep we spoke to does seem to be willing to work with her. To answer your question, no, there is no good reason she’s the one shouldering this debt or this problem.
    Thank you again & Happy Holidays!


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