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Protecting Disability Benefits from Creditors

By James W. Speer

Federal and state laws that exempt disability benefits from creditor process are intended to protect the debtor’s family from impoverishment. The best way to help a client who has a disability and whose sole source of income is frozen by garnishment of an otherwise exempt account involves determining the source of benefits, where the benefits are being deposited, the creditor’s identity, and the nature of the debt. Not commingling exempt with nonexempt funds and depositing exempt funds in special electronic transfer accounts are ways to help clients avoid frozen accounts.

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