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Q: Is a car purchased outright with my Social Security exempt from debt collectors? ( Answered,   1 Comment )
Question  
Subject: Is a car purchased outright with my Social Security exempt from debt collectors?
Category: Reference, Education and News > Consumer Information
Asked by: downforthecount-ga
List Price: $50.00
Posted: 12 Sep 2006 16:39 PDT
Expires: 12 Oct 2006 16:39 PDT
Question ID: 764641
Are items (like a car) purchased outright with savings from my Social Security
income exempt from debt collectors (or, in other words, 'judgment
proof')?  I have read that Federal law makes your Social Security
benefits exempt from levy, garnishment, assignment by regular
creditors, and from the trustee in bankruptcy. (See
http://caselaw.lp.findlaw.com/scripts/ts_search.pl?title=42&sec=407
for Federal law)  I've been told that means that even a creditor with
a judgment cannot intercept your Social Security payments nor can they
take the money from you after it has been paid to you.  If that is
true, my question is whether an item purchased using only my Social
Security income
enjoys the same protection.  If not why not? If yes, is there existing
case law or legal precedents to support this? Please cite if
available.  P.S.  I live in Florida if that makes a difference.
Answer  
Subject: Re: Is a car purchased outright with my Social Security exempt from debt collectors?
Answered By: tutuzdad-ga on 12 Sep 2006 19:05 PDT
 
Dear downforthecount-ga;

Thank you for allowing me to answer your interesting question. Bear
with me; I have a long answer and a short answer. Unfortunately for
you they both lead to the same conclusion:

Indeed Federal law does make your Social Security benefits exempt from
levy, garnishment, assignment by regular creditors, and from the
trustee in bankruptcy.

U.S. Code : Title 42 : Section 407
http://caselaw.lp.findlaw.com/scripts/ts_search.pl?title=42&sec=407

Social Security benefits can, however, be levied in some instances to
collect delinquent Federal taxes and also, under certain
circumstances, delinquent child support payments or alimony
obligations.

?Section 207 of the Social Security Act provides: "The right of any
person to any future payment under this title shall not be
transferable or assignable, at law or in equity, and none of the
moneys paid or payable or rights existing under this title shall be
subject to execution, levy, attachment, garnishment, or other legal
process, or to the operation of any bankruptcy or insolvency law."
http://www.fair-debt-collection.com/searches/garnishment.html

The operative words with regard to the protection of one?s Social
Security funds are ?benefits? and ?payment(s)?.

While it is true that a person?s BENEFITS or PAYMENTS are exempt from
garnishment or seizure in most instances, once the money is converted
to non-exempt property (cars, jewelry, etc), that property becomes
fair game to debt collectors because it is not expressly protected by
the US Code. In fact, at least where government seizure, garnishment,
attachment or otherwise ?interception? is concerned, the Internal
Revenue Code of 1954 (26 U.S.C. 6331), actually permits it.

??section 6331 of the Internal Revenue Code of 1954 (26 U.S.C. 6331)
which was enacted into law on August 16, 1954, after the enactment of
section 207, gives the Secretary of the Treasury the right to levy or
seize for collection of delinquent Federal taxes, property, rights to
property, whether real or personal, tangible, or intangible and the
right to make successive levies and seizures until the amount due,
together with all expenses, is fully paid. References: SSR 79-4:
SECTIONS 207, 452(b), 459 and 462(f) (42 U.S.C. 407, 652(b), 659 and
662(f)) LEVY AND GARNISHMENT OF BENEFITS 20 CFR 404.970 SSR 79-4?
http://www.ssa.gov/OP_Home/rulings/oasi/41/SSR79-04-oasi-41.html

Moreover, you will also note that in the statute above is this
specific clarification of the law which absolutely defines that which
is considered non-exempt:

"Notwithstanding any other law of the United States, no property or
rights to property shall be exempt from levy other than the property
specifically made exempt by subsection (a). The property exempt from
levy in subsection (a) includes wearing apparel and school books;
fuel, provisions, furniture, and personal effects, not to exceed $500
in value; books and tools of a trade, business, or profession, not to
exceed $250 in value. Social Security benefits are not specifically
exempted from levy by this subsection. Furthermore, as between
conflicting treatment of the same matter by two statutes (section 207
of the Social Security Act and section 6334 of the Internal Revenue
Code of 1954), the one enacted later (section 6334 of the Internal
Revenue Code of 1954) would control with respect to that matter.?

What does Section 6334 of the IRS Code say consider ?exempt? property?
Look for yourself:

TITLE 26 Subtitle F 
CHAPTER 64 Subchapter D 
PART II 
 6334 Property exempt from levy
http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00006334----000-.html

Neither automobiles, nor any other property for that matter, is
considered exempt because it was purchased or paid for with funds
realized from exempted Social Security benefits. Likewise, in this
statute is a similar statement:

?(c) No other property exempt 
Notwithstanding any other law of the United States (including section
207 of the Social Security Act), no property or rights to property
shall be exempt from levy other than the property specifically made
exempt by subsection (a).?

Since the statue explicitly states ??including section 207 of the
Social Security Act..? that brings us full circle to Social Security
Act 207 which specifically says, ?The right of any person to any
FUTURE PAYMENT under this title shall not be?[subject to legal
process]?
http://www.ssa.gov/OP_Home/ssact/title02/0207.htm

So, while this is not to be considered legal advice (since our
disclaimer points out that we prohibited from doing that), it is
clearly the long legalistic answer to your question according to the
information that has been published on the matter.

The short answer to your question is NO. An item purchased using only
your Social Security income does not enjoy the same statutory
protection as the benefits themselves.

Why?

Simply put, once that exempted income is converted to non-exempt
property it becomes a target it?s because the statues do not
specifically provide protection for it in the same manner as the
benefits themselves.


I hope you find that my answer exceeds your expectations. If you have
any questions about my research please post a clarification request
prior to rating the answer. Otherwise I welcome your rating and your
final comments and I look forward to working with you again in the
near future. Thank you for bringing your question to us.

Best regards;

Tutuzdad-ga ? Google Answers Researcher


[INFORMATION SOURCES]

Defined above

[SEARCH STRATEGY]


SEARCH ENGINE(S) USED:

Google ://www.google.com
 

[SEARCH TERMS USED]

SOCIAL SECURITY

BENEFITS

EXEMPT

NON-EXEMPT

PAYMENTS

INCOME

GARNISHMENT

LEVY

SOCIAL SECURITY ACT

INTERNAL REVENUE SERVICE

IRS

UNITED STATES CODE
Comments  
Subject: Re: Is a car purchased outright with my Social Security exempt from debt collectors?
From: neilzero-ga on 13 Sep 2006 08:42 PDT
 
Also, it would be difficult and/or costly to prove that you used your
social security check to purchase the car.  Neil

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