Bankruptcy can be quite intimidating. There is a pressure of being unable to cope up with the increasing demands of the debt collectors apart from the social stigma attached to bankruptcy. In case you get sued by the debt collector for non-payment of dues, and the court holds the suit, you are at a huge risk. Your bank accounts and other sources of income (employers) might be used to help settle the debt to the creditors. Lawyers of Los Angeles based law firm Recovery Law Group explain that certain funds are the same from garnishments due to them being federal benefits.
Here’s a list of the items which are exempted from garnishments under federal benefits:
- Veterans’ Benefits
- Social Security Benefits
- Service Members’ Pay
- Supplemental Security Income (SSI) Benefits
- Student Assistance
- Merchant Seamen Wages
- Civil Service and Federal Retirement and Disability Benefits
- Military Annuities and Survivors’ Benefits
- Railroad Retirement Benefits
- Foreign Service Retirement and Disability Benefits
- Federal Emergency Management Agency Federal Disaster Assistance
- Longshoremen’s and Harbour Workers’ Death and Disability Benefits
- Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
Exceptions to the Rule
As with most cases, there are exceptions to the federal benefits too. Though most of the time, the above-mentioned benefits are exempted from debt collectors, there are exceptional cases too. Certain debts like a student loan, alimony, child support or taxes, are not exempted even after bankruptcy. In these cases, your benefits can be used to pay off these debts. It is therefore important that you keep your business in order.
Consulting a bankruptcy attorney can shed some light on the prospective options available to you during bankruptcy. In case a debt collector sues you, you should respond to the suit instead of avoiding it or lying low. This might cost you your benefits and wage garnishment, apart from late fees and other expenditures, if timely action is not taken. Since bankruptcy can be quite confusing and daunting, the legalities should be left to experienced lawyers.