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Social Security is Garnishing My Benefits for an Old SBA Loan. What Can I Do? – Berhan

Written by Steve Rhode

“Dear Steve,

I will turn 70 in 45 days. After I lost my business and employment I am leaving on a fixed income that I draw from SS and my wife’s earnings. My company defaulted on $48,000 SBA loan that I am a guarantor. My social security payment has been deduced By 15% ($225.30 per month) to pay the SBA loan. Can SBA legally take this from my SS benefits?

Can the Small Business Admistration legally take a portion of my Social Security benefits to pay for an SBA loan that my company defaulted?

Berhan”

Dear Berhan,

In God We TrustWhile Social Security benefits can’t generally be garnished. They can for debts owed to the U.S. Government.

Social Security will garnish benefits:

  • To enforce child support or alimony obligations under 42 USC 659.
  • To enforce a valid garnishment for court-ordered victim restitution under 18 USC 3613.
  • To collect unpaid federal taxes under 26 USC 6334(c).
  • To have a portion of your check withheld to satisfy a current year federal income tax liability under 26 USC 3402 (P).
  • Other federal agencies will offset benefits to collect money from benefits to pay a non-tax debt owed to that agency according to the Debt Collection Act of 1996 (Public Law 104-134).

if the amount garnished creates a financial hardship, you can ask Social Security for reconsideration of the garnishment. Financial hardship is defined as “We will find financial hardship when you show that withholding a particular amount from your pay would deprive you of income necessary to meet your ordinary and necessary living expenses. You must give us evidence of your financial resources and expenses.”

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

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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