Strong Creditor Collection Tools0

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One of my asset protection clients has a judgment entered against her by a federal regulatory agency. This client has almost no income, except for a modest monthly social security check. The creditor federal agency hired a commercial collection firm to collect its judgment. As part of the collection effort, my client’s social security income was garnished. There is a federal statute which states that creditors cannot garnish social security. The client wants to know how he can dissolve the garnishment and protect her assets.

IRS – Asset Protection Exempt

The IRS has enhanced collection tools including the legal right to garnish social security checks and other benefits sponsored by the federal government. Specifically, Section 6334 (c) of the Internal Revenue Code (26 U.S.C. 6334 (c)) allows Social Security benefits  to be taken to collect unpaid federal taxes, if monthly social security benefits exceed $750. If benefits do exceed the $750 threshold, the IRS gan garnish up to 15% of the income. Of course, a debtor has the right to appeal for a “hardship” exception.

Other federal regulatory agencies have similar remedies available to them, and no amount of asset protection planning can protect federal benefit income from such garnishment remedies. Any judgment owed to the federal government can be enforced by garnishing income received as part of social security or any similar government benefit.

But this is one collection rule that I don’t think we should be complaining about. After all, if one owes the federal government money, isn’t it just common sense that federal social benefits should go toward paying the debt. If you disagree, tell me why below.

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