Federally Protected Funds
The following funds are protected from most creditor levies: Social Security (retirement and disability), Supplemental Security Income (SSI), Veterans Administration benefits, federal civil service retirement, federal Railroad Retirement, and federal emergency disaster assistance. Under the 2011 federal rule, banks must automatically protect 2 months of direct-deposited federal benefits -- no action required from you.
State-Protected Funds
State exemptions may additionally protect: state disability benefits, workers' compensation, unemployment insurance, public assistance/welfare, state retirement and pension benefits, child support received, crime victim compensation, and a dollar amount of general funds (wildcard exemption). Protection varies widely by state -- some states protect very little beyond federal benefits.
How Automatic Protection Works
For federal benefits deposited via direct deposit, your bank automatically reviews the last 2 months of deposits and protects the cumulative amount of federal benefit deposits during that period. Example: if $2,000/month in Social Security was deposited over 2 months, $4,000 is automatically protected. The bank leaves this amount accessible and only freezes funds above this amount.
When You Must Act
Automatic protection only covers 2 months of federal direct deposits. If you have more than 2 months of benefits in the account, you must file a claim of exemption for the excess. If your benefits came by paper check, automatic protection may not apply -- you need to file a claim proving the source. If you have state-exempt funds (workers' comp, unemployment), you must file a claim to protect them.
Frequently Asked Questions
What if my bank does not automatically protect my Social Security?
Banks are required by federal law to apply the automatic look-back calculation for direct-deposited federal benefits. If your bank fails to protect these funds, file a complaint with the CFPB and contact a consumer attorney.
Are my wages exempt from a bank levy?
Once wages are deposited in your bank account, state law determines protection levels. Some states protect all wages; others protect none once deposited. Wage garnishment (taken before deposit) has separate federal limits (25% of disposable income). Check your state's bank account exemption laws.
Can retirement account funds in a bank account be levied?
Funds in qualified retirement accounts (401k, IRA) are generally protected from creditors, even after withdrawal and deposit into a bank account in some states. However, once retirement funds are commingled with non-exempt funds, tracing becomes difficult. Keep exempt funds separate.
Check your bankruptcy discharge eligibility with our free screening tool.
Free Discharge Screener