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Thread: Creditors Questions

  1. #1

    Creditors Questions

    I am probally in the same boat as some of you. After my accident 8 years ago I had more medical and other bills that I could handel. Well 8 years later I recieved a judgment in the mail for a $3200 bill I cannot afford to pay. The bill is in my name but none of our property or cars is. The only thing my name is on is our bank account and my wife is affraid the creditors will put a garnishment on it. I was wondering if that has ever happened to anyone and can they do that since my only source is SSD and it is direct deposited into my checking account?
    Thanks, John
    Disabled American Veteran

  2. #2
    Senior Member rdf's Avatar
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    Jul 2001
    Someplace between Nowhere and Goodbye
    Johh, I'm 100% certain they can't go after your SSDI payments perse, if they're delivered to your house. The government doesn't allow garnishment of SSDI checks through them, but after they're turned into cash, I don't know the law. Seems like I had a similar problem with the IRS a couple years after my injury, where the IRS cleaned out my bank account because I didn't file the year I was injured (like I was thinking about it at the time )

    But once they're cashed and in your bank account, they might be fair game...please call your bank and inquire about this, or call SS. Or check their website. Good luck friend, it's always something...
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  3. #3
    Senior Member rdf's Avatar
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    Jul 2001
    Someplace between Nowhere and Goodbye
    Can Social Security benefits be garnished by creditors to pay a debt?

    Section 207 of the Social Security Act (42 U.S.C. 407) protects Social Security benefits from assignment, levy, or garnishment. However, the law provides five exceptions:
    • Section 459 of the Act (42 U.S.C. 659) allows Social Security benefits to be garnished to enforce child support and/or alimony obligations;
    • Section 6334 (c) of the Internal Revenue Code (26 U.S.C. 6334 (c)) allows benefits to be levied to collect unpaid Federal taxes;
    • Section 3402 (P) of the Internal Revenue Code allows beneficiaries to elect to have a percentage of their benefits withheld and paid to the Internal Revenue Service to satisfy their Federal income tax liability for the current year;
    • The Debt Collection Act of 1996 (Public Law 104-134) allows benefits to be withheld and paid to another Federal agency to pay a non-tax debt the beneficiary owes to that agency: and
    • The Tax Payer Relief Act of 1997 (Public Law 105-34) authorizes the Internal Revenue Service to collect overdue federal tax debts of beneficiaries by levying up to 15 percent of each monthly payment until the debt is paid.The Social Security Administration's responsibility for protecting benefits against legal process and assignment usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of the Act as long as they are identifiable as Social Security benefits using normal banking practices. For example, only social security benefits are deposited into a particular bank account.
      If a creditor tries to garnish your social security check, inform them that unless one of the five exceptions apply, your benefits can not be garnished. You also may want to provide this same information to your financial institution and seek legal assistance if you believe it is needed.

      NOTE: Supplemental Security Income payments cannot be levied or garnished.

    edit: from the above, it seems only the feds and child support/alimony can get your SSDI money. But I just skimmed it, please read in full.
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  4. #4
    Senior Member rdf's Avatar
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    Seems to be safe, have your SSDI money go into an account only for that purpose, i.e. don't blend money from other sources with your SSDI money in the same account.
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  5. #5
    Senior Member skippy13's Avatar
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    Mar 2008
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    There is also a statute of limitations on debts that are not of federal origin. After a certain period of time (if they have not contacted you previously that is) the debt cannot be collected. It is seven years. Also if the debt should have been billed to medicare/medicaid or the Oregon Health Plan in the first place and they reasonably knew that they cannot come back on you for it, it is illegal. At least in my state (Oregon). Your bank accounts may be fair game however, if your wife has income that is contributed to the same account your check is deposited into. Get a separate account for your SSDI deposit
    Last edited by skippy13; 05-08-2008 at 12:43 AM.

  6. #6
    Were you in the military when you were injured? We often find that our active duty patients were incorrectly billed for their care in a civilain hospital when they were first injured, instead of the bill going to the military. If so, see your VA SCI Social Worker and they should be able to help you.


  7. #7

    If it is a court judgement it is good for ten years and then the judgement holder would need to notify the court that the bill has not been paid and it will be renewed for another ten years.

    If its a non-secured debt. Like a credit card there is a limitation in most states. You would have to check your states limit on years.

    And if you were married at the time you made this debt some states will look at it as your wifes debt to.

  8. #8

    Community property States

    Oregon is not a community property state:

    Community Property States
    Community property states treat marital income differently than other states (which are sometimes called common law states). As a result, the tax law has special rules for community income. The IRS Restructuring and Revision Act of 1998 revised the treatment of spousal liability, and includes rules for community property states.

    Special rules apply to spousal property and income in the community property states:

    New Mexico
    You can learn more about tax reporting in community property states by obtaining IRS Publication 555.

    Some or all income earned by one spouse may be community income in these states. As a general rule, that means the tax rules will treat this income as if each spouse earned half of it. If you and your spouse file separate returns, each of you has to report half of the community income. In addition, you would report half of the income produced by any property that's treated as community property (for example, savings bonds that are purchased with community income). You would also report the entire amount of any income you have that's treated as your separate income under the laws of your state.

    Were you served notice of the debt as well as the court hearing? Were they able to produce a debt history? Was the interest run up before they files? If this was credit card, was it signed under "Seal" You would have to see the original contract.

    If it is not a community property state (see above) then I advise you to have both your name and your wifes on all property, accounts, etc and have the accounts marked Husband and Wife. Then none of it can be touched. There are other options as well. I sent a PM, so reply if I can give you further suggestions.

    Word of warning, the ecomomy is bad so creditors are becoming more aggressive. Check the time frame for liability, the ccount could have been sold and no longer be valid. Judges make decisions on the info they are provided.
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  9. #9
    Statutes of limitations for debt vary by state and commonwealth. Check your individual state's/commonwealth's statutes for specific info.

    Also, medical debt can be the responsibility of a spouse if it was incurred when married. Again, check the statutes to see if your state or commonwealth has such a law. (Example ~ Tennessee has one on the books stating husbands are responsible for medical debt of their wives if the debt was incurred during marriage. At least that was the law when I was married.)

    Even though it is illegal to attach funds awarded you by SSDI, your bank account may still be attached. If so, go to court to have your funds returned. Have the previous several months bank statements with you as proof the funds in the account are from SSDI and only SSDI.

    If you are being harassed by creditors you cannot pay, inform each creditor in writing your sole means of income is SSDI. If the stature of limitations has expired for your state or commonwealth, state this in the letter.

    If you are being hounded by a particularly aggressive creditor, include in your letter that you do not acknowledge the alleged debt.

    Also, request the creditor not contact you by any means other than mail.

    Refer to the Fair Debt Collection Practices Act in this letter by saying something like, "According to the Fair Debt Collection Practices Act my income may not be attached as it is as a result of SSDI and this is my sole means of income."

    If you do acknowledge the debt and can pay even a small amount each month, do so. If you plan to re-pay or pay a part of the bill let the creditor know what you can and will do. It can seem daunting to face bills in the thousands of dollars. However, by paying a little each month debts can sometimes be repaid. Underestimate the amount you will pay to the creditor so you have a little wiggle room if you have more medical expenses.

    Keep a copy of the letter and send by registered mail/signature required/returned receipt requested to the creditor's physical address, not a P.O. Box.

    If medical bills have not been turned over to collections contact the healthcare providers' billing departments, inform them of your financial situation and negotiate the bill. It is amazing what many hospitals and doctors will do in such situations. Your debt may be written off or greatly reduced by talking to the providers honestly.

    I wish you and your wife the best. Keep us posted, okay?

  10. #10
    Sorry Mem in Tn medical debt isn't spousal responsibility anymore. Neither are student loans even if one borrowed while both went to school (oh yea tell me about it). Also what you came into the marriage owning can not be touched unless it's been refinanced in both names. But that's another thread.
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