Government makes it easier to get at your Social Security Check

Until recently, if you got a Social Security check from the federal government, there were limits to what the government could do to take money out of your check to pay off debts you may have owed to Uncle Sam. According to a recent story in the Wall Street Journal, defaulted student loans, unpaid farm or small business loans, unpaid income taxes, and even money veterans may have owed the government for health care were just some of the government debts that could have been paid out of that check.

Until recently, one of the biggest limitations was that in most cases the government could only collect on debts that were less than ten years old. Because of changes in the law caused by the 2008 Farm Bill, that is no longer the case. Prior to those changes, only federal student loan delinquencies weren't subject to the ten year statue of limitations.

While the news will be bad for some, it doesn't have to be catastrophic. For example, for most debts, the government can withhold a maximum of 15% of your benefits, and the reduction in benefits can't drop below $750 per month.

Why is the government doing this?
As is often the case with changes in federal laws and regulations, if you follow the money, the changes may make sense. The Wall Street Journal reported that in 2001, roughly 1.6% of the delinquent debt collected by the Treasury Department came from withholding Social Security payments rather than other sources like federal tax refunds. In 2008, the percentage went up to 10.8%. Given the aging of the population and increasing unemployment, perhaps the Treasury department and elected federal officials are looking to Social Security payments as a bigger growth area than tax refunds, and and changing the rules to make it easier to put their hands on it.

What if you are affected?
The good news is that if you the government starts to hold back some of your Social Security payments, and you think that they might be wrong, you have the right to review and copy your files, negotiate a different payment arrangement, and apply for waivers due to a disability or other hardships.