Yes, the SBA through the Department of Treasury can garnish your Social Security. But you do have options to stop the garnishment.
The SBA Offset
If you have defaulted on an SBA loan and you are a personal guarantor, the SBA, through the Department of Treasury, can garnish your Social Security benefits. The government calls this an "offset". By way of this offset, the federal government can take a portion of your monthly Social Security benefit. If you and your spouse were both personal guarantors, the SBA will subject both of you to a Social Security garnishment or "offset."
How Much Can the SBA Take from My Social Security?
The SBA can take up to 15% of your Social Security benefits. So, if you receive $1,000 a month, you could lose $150. However, by statute, your benefit payments of up to $9,000 per year—or $750 per month—are exempt from offset. That is, the aggregate amount of your monthly benefit payments must exceed $750 to qualify for offset. Congress imposed the 15% limitation by regulation in response to the concerns some members of Congress expressed when enacting the Debt Collection Improvement Act, which authorizes the offset scheme. Congress worried that federal benefit recipients may depend on the Social Security benefit payments for a substantial part of their income. With these concerns in mind, the Department of Treasury imposed the 15% limit on the offset of Social Security benefit payments.
In other words, the amount of a Social Security payment eligible for offset is the lesser of:
(i) the amount of the debt;
(ii) an amount equal to 15% of the monthly covered benefit payment; or,
(iii) the amount, if any, by which the monthly covered benefit payment exceeds $750.
For example, if you receive a monthly Social Security payment of $850, the amount which can
be offset is the lesser of $127.50 (15% of $850) or $100 (the amount by which $850 exceeds $750). In this example, assuming the debt is at least $100, the amount which can be offset is $100 each month.
What If the Social Security Garnishment Causes Me Financial Hardship?
Unfortunately, Congress and the Department of Treasury already accounted for a hardship with the offset limits discussed above. Even though the $100 garnishment in the example above may constitute a financial hardship for you, the government provided no mechanism to appeal the garnishment or have it reviewed based on financial hardship or reduced.
Can I Stop a Social Security Garnishment?
Certain avenues exist that may be available to you in order to stop the Social Security garnishment. These avenues include forcing the SBA to "recall" the debt from the Department of Treasury and submitting an offer in compromise with the SBA to settle the debt.
Another available strategy may include an appeal to the SBA Office of Hearings and Appeals if you do not believe you owe the debt, but only if you exhaust certain other administrative avenues first.
Lastly, you may be able to appeal to your Federal District Court. Again, you may need to exhaust certain administrative prerequisites before you can go to Federal District Court.
All of these potential remedies require experienced legal help.
Contact Protect Law Group for a Free Consultation
Please contact Protect Law Group today and schedule a free initial consultation with one of our experienced, assertive attorneys. Our attorneys have years of experience dealing with Social Security garnishments and resolving your SBA loan default situation.