Home > 2011 > Personal Finance

Your Social Security Disability Income Is Probably Safe…For Now

Advertiser Disclosure Comments 5 Comments

Is the Social Security Disability Insurance program on a path of self-destruction? Thanks to the aging population and high unemployment levels, a record number of Americans are collecting benefits, and the Social Security Board of Trustees is warning that the Disability Income Trust Fund will be exhausted in 2017 unless legislative action is taken. The Social Security Administration’s (SSA) Disability Insurance (DI) program paid almost $123 billion in benefits in fiscal year 2010 to more than 10 million workers and their dependents.

For many recipients, Social Security Disability Income (SSDI) and/or Supplemental Security Income (SSI) are their financial lifeline. Their more immediate concern may not be what happens in Washington to save the program, but what happens today to the money they receive. I couldn’t find any statistics about how many SSDI and SSI recipients have past-due bills, but if our email is any indication, plenty of them are struggling and getting calls from creditors or debt collectors threatening to take the little income they do get each month. And because it takes so long to get approved for disability these days, applicants may find themselves already in the hole by the time they start receiving benefits.

[Article: What the CFPB Should Do About Debt Collectors]

If you are already receiving SSDI and/or SSI, then it is probably safe from creditors and collectors—for now. But there are still threats you’ll need to watch out for.

Before I describe how and when disability income is protected from creditors, here’s a quick background:

Social Security Disability Income may be available to workers if they have worked long enough to earn credits under Social Security, and they have a severe physical or mental impairment that prevents them from working for a year or more, or if they have a medical condition that is expected to result in death. According to the AP, the average monthly benefit is $927.

[Resource: Get your free Credit Report Card]

Supplemental Security Income (SSI) makes monthly payments to ­people who have low incomes and little in the way of financial assets or resources, including those who are disabled. Children as well as adults may qualify for SSI ­disability payments. At the end of 2010, the SSA reported the average monthly benefit under SSI was $501.

Most disabled workers receive SSDI payments. A much smaller number receive only SSI and an even smaller percentage receive both.

For those who rely on these benefits, the good news is that they are generally protected from creditors and debt collectors. However there are exceptions in the case of past-due child support, past-due taxes, and federal student loans. “They can chase you (for student loans) to the grave,” warns bankruptcy attorney Cathy Moran.

“SSI payments cannot be garnished by any creditor,” says attorney Jonathan Ginsberg who practices bankruptcy law as well as representing consumers trying to collect SSDI benefits. ” Why? Congress has decided that SSI beneficiaries are hardly generating any income (around $660 per month maximum under the SSI rules) that as a matter of public policy it would not be fair to garnish their SSI benefits, even for child support or past due taxes.

[Featured Product: Looking for your credit report?]

Mixed Up Social Security Benefits »

Image: Josh McGinn, via Flickr.com

Pages: 1 2 3

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team