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Benefits and Income That May Be Creditor Exempt

When we think of property or income that can’t be touched by most creditors, we tend to think of the more common ones, such as homestead property or an IRA. But there are many sources of income and assets that federal law protects from creditors (who aren’t collecting tax debts). Knowing about them can help you in formulating an asset protection plan.

Types of Exempt Benefits

Some of the varying types of payments that can’t be garnished to offset federal debts include:

  • Military survivors benefits or military retirement benefits.
  • Veterans Affairs Payments – Any law providing a payment that’s provided by the Secretary of Veteran Affairs is exempt and safe from creditors. There are many such programs. Some include pension programs, disability and death compensation, work study and job rehabilitation programs, life insurance, any assistance provided for housing or cars, any allowances for clothing, any accrued benefits or reimbursements for medical, rehabilitation or health needs.
  • Social Security Act payments – Remember, when it comes to disability, this doesn’t include private disability payments – only disability payments made by the Social Security Administration.

Some payments or benefits can be considered exempt if the Secretary of the Treasury provides the exemption. If you receive any of the benefits below, and are concerned about creditors, it’s important that you make sure that such benefits are exempt, and apply for exemption where the programs provide:

  • Food stamp payments and programs;
  • School lunch programs;
  • Payments made under any rural development programs, which can include rental assistance, housing loans and grants, or rural business opportunity grants;
  • Contributions for the operation of low cost housing, including Section 8 housing assistance, sometimes called the rental voucher program;
  • Direct loans for the elderly or the handicapped; or
  • Payments to the September 11 victims’ fund.

Get More Information

This is just a partial list of the protected assets and payments. The level of protection may vary, depending on the payment. For example, some may simply have protection from being intercepted by federal agencies to pay federal non-tax debts. Others may be completely exempt from any creditor in any court to collect debts for any reason.

Many people may find that a large portion of their living wages come from these and similar programs. In those cases, it may be wiser to try to allow creditors to collect judgments they can never collect, as opposed to agreeing to make payments that are unaffordable. And if you’re considering bankruptcy, you may also find that many of these benefits are totally exempt.

But because every situation is so specific, it’s always best to check with an attorney before making that kind of a decision.

As an aside, these are also benefits that could be lost should your income increase, or if you expect inheritances or lawsuit proceeds. Seeing an asset protection attorney can help you receive this money without risking these benefits.

Make sure your assets and income are protected. Contact Tampa business, asset and probate attorney David Toback to discuss a comprehensive asset and estate plan.

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