If you’re living on disability benefits, credit card companies generally cannot take that income to pay a balance you owe. Section 207 of the Social Security Act shields Social Security Disability Insurance (SSDI) from garnishment for ordinary consumer debts, and Supplemental Security Income (SSI) carries similar protection.1Social Security Administration. Social Security Act § 207 That doesn’t make the debt disappear, and it doesn’t stop a creditor from suing you. But it changes what they can actually collect, and it opens up options that work well for people on a fixed income.
Can Credit Card Companies Take Your Disability Benefits
Private creditors cannot intercept SSDI or SSI payments from the government to satisfy a credit card debt. The protection extends into your bank account, but only under specific conditions. Federal rules require your bank to automatically shield up to two months’ worth of directly deposited federal benefits from most creditor freezes.2Office of the Comptroller of the Currency. Garnishment – Bank Determination of Protected Amount
The direct-deposit piece matters. If you receive your benefits by paper check and deposit them yourself, the bank isn’t required to apply this automatic protection, and you may have to prove in court that the funds are exempt before a creditor releases them.3Consumer Financial Protection Bureau. Can a debt collector take my Social Security or VA benefits?
A few obligations sit outside these protections. Court-ordered child support and alimony can still be collected from Social Security benefits,4Administration for Children & Families. Attachment of Social Security Benefits and the federal government can garnish SSDI for debts like unpaid federal taxes.5Internal Revenue Service. Internal Revenue Manual § 5.17.3 Credit card debt is not on that list.
What Happens If a Credit Card Company Sues You
A credit card issuer can still take you to court. If they win, they get a judgment, and that judgment lets them try to place liens on property or freeze money in your bank account.
The most common move is a bank levy. Anything in your account above the protected amount of directly deposited benefits can be frozen or turned over to the creditor. Mixed accounts get messy: if your disability deposits sit alongside wages or other income, sorting out what’s protected becomes harder, and some funds that should have been safe can end up caught in the freeze.
Keeping Protected Funds Protected
A practical step is to keep disability benefits in a dedicated bank account that receives only those direct deposits. Clean separation makes it straightforward for the bank to identify the money as federally protected, and if a creditor tries to freeze the account, challenging the levy is simpler when nothing else is mixed in.
Options for Resolving the Debt
Even with your income protected, the balance keeps accruing interest and the collection pressure continues. Several structured paths can end the debt:6U.S. Courts. Process – Bankruptcy Basics
- Chapter 7 bankruptcy, which eliminates unsecured debts like credit card balances.
- Chapter 13 bankruptcy, which lets you keep property while paying off a portion of the debt through a court-approved plan.
- Debt settlement, where you negotiate a lump sum payment for less than the full balance.
- Credit counseling through a non-profit agency, which can produce a budget or a structured repayment plan with your creditors.
Why Bankruptcy Often Fits People on Disability
Bankruptcy tends to work well for disability recipients for a few specific reasons. To file Chapter 7, most people must pass a means test comparing monthly income to the state median.7U.S. Bankruptcy Court for the District of Oregon. What is the Chapter 7 Means Test? Social Security income, including SSDI and SSI, is excluded from that calculation, which makes qualifying easier for many benefit recipients.8Office of the Law Revision Counsel. 11 U.S.C. § 101
Filing also triggers an automatic stay, a court order that halts most collection activity: lawsuits, calls, and bank levies stop.9Office of the Law Revision Counsel. 11 U.S.C. § 362 The stay has exceptions, and some actions such as the collection of domestic support obligations may continue.
Bankruptcy exemptions protect specific property from being sold to pay creditors, and they typically cover a primary home, a vehicle, and household goods.10Office of the Law Revision Counsel. 11 U.S.C. § 522 If you own property that exemptions can’t fully cover, Chapter 13 offers a way to keep it while repaying debts through a plan lasting several years.11U.S. Courts. Chapter 13 – Bankruptcy Basics