Thursday, September 29, 2022

Can Va Disability Be Garnished From A Creditor

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I Need Help Fast My Ex

Can my Disability benefits be garnished for unpaid student loans?

When a military retiree elects VA disability compensation, and he or she has a VA rating of less than 50% or else has Combat-Related Special Compensation, this election decreases the share of the military pension which is available for division, known as disposable retired pay. When there is a military pension division order which is paid out through the military retired pay center, then that means a drop in the money which the former spouse gets.

Whether the former spouse has a remedy in court depends a lot on the circumstances. You cannot get the judge to require the ex-husband to indemnify you if there is no prior requirement for indemnification, either in a written agreement or in a prior court order. The U.S. Supreme Court ruled on that issue in Howell v. Howell, decided May 15, 2017. So when theres NO previous agreement or order requiring indemnification, you cannot get the court to order a pay-back.

If there WAS an agreement or order on this, then there MAY be a chance of obtaining indemnification. But it will require a good lawyer and the time and funds to fight it out in court , since these contingencies were not addressed in the Howell decision.

What To Know About Debt Collection

What types of debts are covered under the law?

Your credit card debt, auto loans, medical bills, student loans, mortgage, and other household debts are covered under the FDCPA. Business debts are not.

Can debt collectors contact me at any time or place?

No. Debt collectors cant contact you before 8 a.m. or after 9 p.m., unless you agree to it. They also cant contact you at work if you tell them youre not allowed to get calls there.

How can a debt collector contact me?

Debt collectors can call you, or send letters, emails, or text messages to collect a debt.

How can I stop a debt collector from contacting me?

Mail a letter to the collection company and ask it to stop contacting you. Keep a copy for yourself. Consider sending the letter by certified mail and paying for a return receipt. That way, youll have a record the collector got it. Once the collection company gets your letter, it can only contact you to confirm it will stop contacting you in the future or to tell you it plans to take a specific action, like filing a lawsuit. If youre represented by an attorney, tell the collector. The collector must communicate with your attorney, not you, unless the attorney fails to respond to the collectors communications within a reasonable time.

Can a debt collector contact anyone else about my debt?

What does the debt collector have to tell me about the debt?

What if I dont think I owe the debt?

What are debt collectors not allowed to do?

Is The Secretary Of The Department Of Veterans Affairs The Only Person That Can Attach To A Veterans Benefits

No thats wrong. This issue was litigated in Tennessee in the Rose case, and it went all the way up to the U.S. Supreme Court. The Courts ruling in 1987 was:

  • the Department of Veterans Affairs has the power to apportion VA payments,
  • that power can be exercised if the veteran is not discharging his or her responsibility for support, and
  • most importantly, that doesnt preclude state court judges from granting family support awards based on solely the VA benefits received by a party in the lawsuit.
  • In fact, 42 U.S.C. 659 makes it clear that courts may attach VA benefits through garnishment if the individual has waived military retired pay to receive VA payments.

    Also Check: How To Apply For Disability Washington State

    Consumer Vs Federal Debt

    VA benefits cannot be garnished to repay consumer debt, such as a past due credit card bill or a personal loan. Benefits also cannot be garnished to repay past due federal student loan debt or be included in bankruptcy proceedings. However, there is no built-in protection for VA pension and retirement benefits if you owe money to the federal or state government. Pension and retirement benefits are subject to assignment for federal debts such as child support or alimony, as well as federal and state income taxes.

    Two Months Of Protection

    Can Your VA Disability Be Garnished?

    First, the bank or credit union that holds your account must protect any benefits over the past two months. If there are more than two months worth of benefits in your account, the bank can freeze or garnish that extra money. For example, if you get $1,000 every month in SSDI, and a creditor garnishes your accounts, the bank must to allow you to use any money deposited within the last two months, up to $2,000. Anything more than that, it can freeze.

    Recommended Reading: How Much Does Disability Pay In California

    Can The Irs Garnish Social Security

    Although its not common, the IRS can garnish 15% of persons Social Security. They must provide a 60-day notice first. Lower-income seniors can apply for non-collectible now status with the IRS. A single person with income less than $2127 and a couple with income less than $2873 can qualify for non-collectible now status and pay nothing. A senior whose Social Security is garnished can contact the IRS, apply for non-collectible now status, and stop the garnishment. A state tax collector cannot garnish social security for past-due state taxes. Here is a link to an article providing more information about seniors and past-due taxes from HELPS, a national nonprofit law firm that assists lower-income seniors:

    Seniors with higher incomes can always make arrangements to pay taxes under $50,000 over five years or arrange for other payment to prevent the garnishment of Social Security. It is possible in certain circumstances to discharge taxes over three years old in bankruptcy.

    Read Also: How To Change Va Disability Direct Deposit

    What To Know About Old Debts

    What if my debt is old?

    Debt doesnt usually go away, but debt collectors do have a limited amount of time to sue you to collect on a debt. This time period is called the statute of limitations, and it usually starts when you miss a payment on a debt. After the statute of limitations runs out, your unpaid debt is considered to be time-barred.

    If a debt is time-barred, a debt collector can no longer sue you to collect it. In fact, its against the law for a debt collector to sue you for not paying a debt thats time-barred. If you do get sued for a time-barred debt, tell the judge that the statute of limitations has run out.

    How long the statute of limitations lasts depends on what kind of debt it is and the law in your state or the state specified in your credit contract or agreement creating the debt.

    Also, under the laws of some states, if you make a payment or even acknowledge in writing that you owe the debt, the clock resets and a new statute of limitations period begins. In that case, your debt isnt time-barred anymore.

    Can a debt collector contact me about a time-barred debt?

    Sometimes. It depends on which state you live in. Some state laws say its illegal for a debt collector to contact you about a time-barred debt. But even if you live in a state where a collector may still contact you, they cannot sue or threaten to sue you over a time-barred debt.

    What if Im not sure if my debt is time-barred?

    Does a time-barred debt stay on my credit report?

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    How Much Of Va Disability Can Be Garnished

    Typically, between 20 to 50 percent of VA disability benefits can be garnished as 20 percent is considered to be an insufficient amount for a veterans dependents and 50 percent is considered to cause undue hardship to a veteran. If the veteran has multiple children to support, equal payments will be provided to each child out of garnishment.

    If I Have Other Questions What Should I Do

    VA Disability, Divorce, Child Support, Alimony, Garnishment & Apportionment

    See a military legal assistance attorney or private attorney as soon as possible. Your lawyer can answer many questions and help you to make a fair and intelligent decision about your choices, options and alternatives.

    * * *The LEGAL EAGLE series of client handouts is prepared by Mark E. Sullivan , a family law attorney in Raleigh, N.C.

    Recommended Reading: Ssdi Payment Calendar 2016

    Can Va Disability Be Garnished By The Irs

    If you have unpaid federal taxes, the IRS may garnish your paychecks, levy your bank accounts or attempt to collect in other ways. However, according to federal law, the IRS cannot levy VA disability compensation, nor can they levy any government check you receive as public assistance, such as a VA pension.

    What Exactly Does The Statute Say About A Third Party Getting At Benefits Paid By The Department Of Veterans Affairs

    Title 38, U.S. Code, Veterans Benefits, says at §5301 Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.

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    How Can I Tell If My Account Can Be Garnished

    Some property cannot legally be taken by creditors to pay a debt. Property that cannot be legally taken to pay a debt is called exempt. If your bank account only includes income that is exempt, then your account cannot be garnished.Your Social Security is exempt. So, if the only income going into your bank account is your Social Security check, then most creditors cannot garnish it.

    If your only monthly income is Social Security, it would be wise to send an anti-garnishment letter to your bank. If your Social Security is electronically deposited into your bank account, then the bank should automatically look at what exempted amount was deposited within thepast 2 months and allow you, the account holder, full access to that amount. Even if the exempt funds are mixed with other funds in the bank account, the bank has the responsibility to protect the full amount that is exempt. Also, it does not make a difference whether there is a co-owner on the account. However, it is best to keep your Social Security in an account by itself.

    Can Ssi Be Garnished

    Can VA disability benefits be garnished?

    The bank account of a person is the first thing that creditors will be looking to seize when they have a judgment against them. However, if those funds came from SSI or Social Security benefits, there are limitations on what the creditor can do with it. As a bankruptcy law firm, we often hear questions like: Can SSI be garnished? The answer to that is that it simply depends. Generally, no, it cannot. However, there are a few instances where the government may garnish money from your SSI and Social Security benefits.

    At OBryan Law Offices, we possess an in-depth knowledge of all areas of financial law. This includes topics such as wage garnishment, tax levies, repossession, and more. In this post, well explain if and when SSI might be eligible for garnishment. Reach out to our experienced attorneys today to schedule a consultation and see how we can help protect you from potential SSI garnishment.

    Recommended Reading: Ssdi Payment Dates 2016

    Can Va Disability Be Garnished For Credit Card Debt

    debtcanVA benefitscardgarnishment

    Your VA benefits are protected from being garnished to pay unpaid taxes and most creditors’ claims, but in certain circumstances, VA benefits can and do get garnished. Only the amount of the disability compensation you were paid in place of retirement pay can be garnished.

    Also Know, can Social Security disability be garnished for credit card debt? For most types of debt, including , medical bills, and personal loans, Social Security cannot be garnished to pay the debt. If your Social Security check is directly deposited in the bank, the bank is required to protect Social Security benefits from garnishment.

    One may also ask, who can garnish my VA disability?

    While straight disability compensation can‘t be garnished, a family court can consider your disability compensation when deciding how much alimony and child support you must pay. The Uniformed Services Former Spouses’ Protection Act exempts VA disability payments from being treated as marital property.)

    What type of federal benefits Cannot be garnished?

    No, in most cases debt collectors and creditors cannot garnish federal benefits. Federal law protects or exempts certain funds or benefits from garnishment. Federally exempt benefits include: Social Security benefits.

    Can Credit Card Companies Take Your Disability Checks

    However, credit card companies, and most other private creditors, will generally be prohibited from seeking your SSDI payments Finally, if you have SSDI money in an account where you also store other money, this may create confusion if a creditor wants to freeze your bank account and garnish money.

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    What Percentage Of Ssdi Can Be Garnished For Child Support

    As mentioned earlier, the federal government expects individuals to make the necessary compulsory payments, be it taxes, student loans, or child support. Failure to pay child support, for instance, may result in the garnishment of your SSDI. But what percentage of your SSDI is prone to this penalty?

    Failing behind child support payment usually results in the garnishment of up to 50 percent of your SSDI benefits if you are a supporting spouse or child apart from the subject of the court order and up to 60 percent if you arent.

    As a disabled individual enjoying the benefits of SSDI, the last thing you would want is to lose part of this benefit. The result of that could hit you hard financially. So, always make an effort to pay your child support to prevent this unfortunate occurrence.

    Get Free Advice About Disability Claims And Appeals

    Garnishments From Veteran Disability Compensation is ILLEGAL!

    A VA benefits attorney can answer questions about a new VA disability claim or help you appeal a rating decision and find ways to increase your monthly disability payments.

    to talk about your claim or appeal. We have helped thousands of veterans get the benefits they deserve.

    Talk to Us About Your Claim:

    Read Also: Can You Get Disability With A Gaf Of 50

    Exceptions To The Garnishment Rule

    Four exceptions can protect VA benefits from being garnished for past due child support and alimony. These include:

    • Proving that the garnishment would cause you an undue financial hardship
    • Your ex-spouse or child has not filed an apportionment request to claim your benefits
    • Your ex-spouse is living with another person and acting like they are married
    • Your ex-spouse was found guilty of conjugal infidelity — cheating — by a state court

    References

    The Prior Court Order Was Entered By Agreement It Expressly States That My Ex

    Not by a long shot. All the VA money is tax-free, so he would get even more money in the end by waiving a piece of the pension.

    Lets take an example: Suppose Johns total retired pay is $1,600 and the court awards Mary, his former wife, 50%, or $800. Then John obtains a VA disability rating and elects to receive VA disability compensation, which equals $600. This means that he waives $600 of the pension to receive VA payments.

    Now the pension-share payment from the retired pay center to Mary is only $500 a month instead of $800 . Shes short by $300 due to the actions of John in applying for VA payments.

    Johns income is now $500 from the pension and $600 from VA. If hes paying taxes at 20% federal, 5% state, then hes receiving net: $375 from the pension and $600 from VA, for a total of $975, while Mary will only be getting $375 a month.

    If John were to reimburse Mary, then hed pay to her the missing $300 each month, which is deductible for him on his taxes, and that only costs him $225 in his tax brackets. Thus he still has $750 after taxes, whereas before the VA waiver, he was receiving $800 taxable each month, or $600 after-tax income! And Mary has the full amount which the court initially ordered.

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    What Are Social Security Benefits

    There are 3 primary kinds of Social Security benefits distributed by the federal Social Security Administration to eligible members of the American public:

    • Supplemental Social Security Income â Payments to disabled persons and adults over the age of 65 who meet income limits

    • Social Security Disability Insurance â Payments to adults who are restricted in their ability to work due to notable disability

    • Social Security Retirement Benefits â Replacement income for eligible retirees and their families

    All Social Security checks are issued by the federal government to eligible individuals who meet strict regulatory criteria. Nowadays, monthly payments are directly deposited into a bank account or onto a debit card issued by the federal government.

    Is Va Disability Considered To Be A Cash Cow In The Legal Profession In Other Words Your Ex

    Can Your VA Disability Be Garnished?

    Not by a long shot! As was pointed out above, neither the former spouse nor the attorney can obtain a portion of VA benefits since they are exempt from distribution as marital or community property upon divorce. While VA benefits can be counted as income for support purposes, they cannot be garnished unless they are paid to a military retiree who has waived part of the pension to get these payments from the VA.

    Whether the judge lets it happen depends on how the case is handled. If the judge has ruled as set out above, then he or she has acted properly and in accordance with federal and state law. If the judge has let an erroneous ruling happen, then the wronged party has the right to appeal that decision or ask the court for reconsideration of the ruling. Thats no different from any other case or party thats what happens in court, and those are the rights of the parties who claim that the judge committed a reversible error in the hearing or trial. Judges sometimes make mistakes or issue incorrect rulings. When that happens, if the wronged party wants to correct the judge, then he or she will have to take an appeal from the ruling.

    Read Also: How Does Va Compensation Pay Work

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