In most cases, short term disability checks are exempt from garnishment. There are exceptions to that rule, however, depending on the source of the check and the nature of the debt that led to the garnishment order. Also, if you move funds between accounts, your bank may not know that the funds are exempt, and you'll have to prove that they are to recoup your money.
Most Judgments Exempt
Disability income generally isn't subject to garnishment, whether it's Social Security Disability Insurance or Supplemental Security Income. Most creditors with a judgement order against you can't garnish or levy funds traceable to disability, even if that's your only source of income. Private disability payments also are exempt from garnishment in most states.
Garnishing from SSDI
Only a select group of creditors can garnish SSDI income to settle debts. The federal government can seize up to 15 percent of your SSDI check to settle overdue tax debt or non-tax debts due a federal agency until the debt is paid off. The first $750 of your check is protected for non-tax debt, but an overdue tax bill will lead to a 15 percent garnishment on the entire amount. You'll lose more of your benefits if you have unpaid child support or alimony -- up to 60 percent of your check can be seized, with an additional 5 percent eligible to be tacked on if you're more than 12 weeks late.
SSI income can't legally be garnished, even for delinquent taxes, child support or overdue student loan payments. The rationale is that SSI is a means-tested program for those with little to no income and few other resources. SSI funds deposited in a bank account remain protected as long as the funds can reasonably be traced to Social Security.
Once the Check Hits the Bank
While disability payments typically can't be garnished, the funds may be seized unknowingly or illegally as part of a garnishment or levy against a bank account. Funds directly deposited into your bank account are protected, as the bank is supposed to review your account to make sure these protected funds aren't seized. However, the funds are only protected for 60 days. This means, for example, that if you receive $1100 in SSDI per month and your account has a $3,000 balance at the time the garnishment order is received, only $2,200 would automatically be exempt from garnishment -- the last two monthly checks.
If a creditor seizes funds deposited more than 60 days ago, you'll have to prove to the court that the money was exempt to get your money back -- for example, by noting that the only funds deposited into the account represent disability income. Getting your funds automatically loaded onto a debit card also keeps them out of the hands of creditors.
Having a bank account devoted solely to SSDI and other disability payments makes it easier to prove to creditors and the court that the funds it contains should be exempt from garnishment.
If you move the direct-deposited funds into a different account, the funds may be garnished because the bank has no obvious way of knowing that the amount deposited represents short-term disability payments. You'll have to alert the bank that the money came from a protected source, and provide proof of this if asked.