A collector can’t garnish anything without a court judgment. Collectors obtain a court judgment by filing a lawsuit, serving a summons and complaint, and eventually obtaining a judgment. Seniors and disabled persons normally have nothing to worry about if faced with a judgment for old debt. Collectors cannot garnish federally protected income like Social Security, pensions, VA and disability benefits. Federal banking rules also automatically protect from garnishment twice the amount of monthly Social Security deposited into a bank account, no matter the source of funds in the account at the time of the garnishment. However, sometimes persons may have extra money that is not from a protected source, such as proceeds from the sale of some asset like a home or car. If that unprotected money is held in a bank account, it could be subject to garnishment. How then can that money be protected?
Sometimes a prepaid Visa card is suggested as a means to protect money from being garnished. A prepaid Visa card looks like a credit card but is entirely different. It’s not supported by credit issued by a bank; instead, it’s paid for with cash. A prepaid card allows you to make purchases using your own money rather than borrowing money from a creditor and paying interest and fees for the privilege. It’s just like paying with cash.
A prepaid card is also as different from a debit card as it is from a credit card. When you make a purchase with a regular debit card, your bank immediately deducts the cost of the purchase from the bank account the debit card is connected to. But with a prepaid debit card, you load money onto the prepaid card until it is used up, and then add more. A prepaid debit card is like a renewable gift card. The money on a prepaid debit card is not held in a bank account with your name.
Here are two links with Walgreen’s and Walmart that show how to get a prepaid debit card and explains in detail how they work:
Judgment creditors would love to be able to garnish a Visa prepaid card – but they can’t. They would first have to find out about its existence. A prepaid card does not show up on your credit report and collectors have no way of knowing if you have one. The only way they’re going to find out about your prepaid debit card is if you tell them yourself, which you would never do. Putting excess money that’s above the protected limit in a bank account into a prepaid card is like taking cash out of your account. A creditor won’t be able to locate and garnish it.
Prepaid debit cards are a relatively new concept. There are simply no procedures in place for judgment creditors to access information in order to garnish those types of accounts.
We are classified as as a charity by the IRS. Around one third of our clients receive our services for free. Our suggested fees are based on our client's ability to pay. We are largely supported by our client's small monthly payments.
Many seniors are “judgment proof,” which means their income is derived from retirement, Social Security, or other accounts that can't be garnished. Debt collectors may not bother to take seniors in this situation to court, since they're unlikely to get the money that way.
Potential donors should ask the fundraiser for the charity's exact name, website and mailing address so they can independently confirm the information. Use TEOS to verify if an organization is a legitimate tax-exempt charity. Don't give in to pressure.
There are resources that will allow you to check if a charitable organization is legitimate. Visit the California Registry of Charitable Trusts website (http://oag.ca.gov/charities), call (916) 445-2021 or send inquiries to P.O. Box 903447, Sacramento, CA 94203-4470.
By paying the collection agency directly, the notification of the debt could stay on your credit report longer than if you attempt to use another option, like filing for bankruptcy. When institutions check your credit report and see this information on it, it may harm your ability to obtain loans.
If Social Security benefits are your only source of income, private creditors and debt collectors have limited options to get their money. They can't garnish your Social Security income and they can't levy your bank account as long as it only contains Social Security income that was put there via direct deposit.
This is the most obvious sign of a debt relief scam. If the person/company offers to help get rid of your debt but first you have to pay them a fee, they're probably lying to you. Cut off contact and file a complaint with us.
If you owe money, the lender will sometimes hire a debt collection agency to try and get you to pay. So, some debt collectors are real, and they're acting on behalf of the company to whom you owe money.
Seniors may be able to get their payments lowered if the debt is federal or PLUS. Try options such as an income-based repayment plan or a discharge. Also consider deferment, forbearance, or consolidation.
Legitimate charities will provide their EIN if requested, which can be used to verify their legitimacy. Taxpayers can find legitimate and qualified charities with the Tax Exempt Organization Search (TEOS) tool on IRS.gov.
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