Clients often ask us if their Social Security disability awards can be taken by their creditors. Unfortunately, many clients who are forced to wait a year or longer for their Social Security Disability awards to go through have overdue bills and calls from creditors. Typically, creditors cannot touch a Social Security Disability award. One major exception, however, is the federal government. Debts owed to the federal government can be taken from a Social Security check.
An increasing number of Social Security beneficiaries have federal student loan debt. A recent Government Accountability Office (GAO) report indicated that the number of individuals whose Social Security benefits were offset to pay student loan debt increased five-fold. However, certain types of federal student loans can be forgiven if the debtor is found to be “Totally and Permanently Disabled” (TPD).
While this is a different standard than Social Security’s definition of disability, the Department of Education will accept the SSA notice of award for disability as proof of a borrower’s TPD. But only if the notice indicates that the SSA will review the borrower’s continuing eligibility for benefits once every five to seven years.
Obtaining a TPD discharge can be helpful to disability beneficiaries to avoid benefit offset. Information about applying for a TPD discharge can be found at www.disabilitydischarge.com.
