Can Credit Card Companies Sue Me If My Only Income Is Social Security?

by Joe Mahlow • Updated on Apr. 04, 2026

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Can credit card companies sue you if your only income is Social Security? Yes, they can file a lawsuit.

But whether they can actually collect is a different issue. Social Security income is generally protected under federal law, which creates a gap between being sued and being forced to pay.

In cases we handle involving fixed-income clients, especially those relying on Social Security or disability, this is where most confusion happens.

People assume that having no traditional income means they are judgment-proof. Others panic and ignore lawsuits, which can still lead to default judgments even if their income is protected. The legal system does not stop a creditor from suing just because your income is limited. It only limits what they can collect after a judgment is entered.

What matters is understanding the difference between being sued, having a judgment entered, and what assets or income can legally be taken.

This article explains what happens when a credit card company sues you with no income, whether Social Security can be garnished, and what steps you can take to face this debt situation smoothly.

can Social Security be garnished for credit card debt

Social Security · Credit Card Debt · Judgment-Proof · Debt Lawsuit · FDCPA · Federal Benefits Exemption

Yes, a credit card company can sue you even if Social Security is your only income. But winning that lawsuit gives them almost nothing they can actually use. Here is why, and what your real risks are.

Updated March 2026 · Sources: Social Security Act 42 U.S.C. § 407, CFPB Federal Benefits Garnishment Rules, Bankrate (March 2025), Upsolve (January 2026), Kiplinger (March 2026), myFICO Forums, Reddit r/personalfinance, Reddit r/SocialSecurity

What people believe

If a credit card company sues me, they can take my Social Security check.

This fear drives many seniors and disabled Americans to avoid lawsuits, ignore summonses, and panic over collection calls. The fear is understandable. The belief is wrong.

What federal law actually says

Credit card companies cannot garnish your Social Security, SSDI, or SSI — even after winning a court judgment against you.

Section 207 of the Social Security Act, codified at 42 U.S.C. § 407, makes Social Security income exempt from garnishment by private creditors. This protection survives a court judgment. The law is clear.

There is an important line to draw here. They can sue you. They can win. They can even get a judgment that says you legally owe the money. But collecting that judgment when your only income is Social Security is a different matter entirely. Federal law puts your benefits out of their reach.

Can a Credit Card Sue You If Your Only Income Is Social Security?

Yes. A credit card company or debt buyer can file a lawsuit against you regardless of your income. There is no law that prevents them from suing someone on Social Security or disability. The lawsuit is about establishing that you owe the debt legally. It has nothing to do with whether they can actually collect it.

Most debt lawsuits today are filed by debt buyers, not original creditors. These are companies that purchased your old account for pennies on the dollar. Common names include Midland Funding, Portfolio Recovery Associates, and LVNV Funding. They file lawsuits in high volume and hope most people never respond. In Texas alone, nearly 374,000 debt collection lawsuits were filed in 2021, according to Pew Charitable Trusts data.

If you live on Social Security and have no significant assets, legal experts call you judgment-proof. That term matters. It means even if the creditor wins, they cannot practically collect anything from you.

Key Legal Concept

What "Judgment-Proof" Actually Means

Being judgment-proof does not mean you cannot be sued. It means that even after a creditor wins a judgment, they have no practical legal mechanism to collect from you. Your income is protected. Your exempted property cannot be seized. Their judgment is a piece of paper with no ability to reach your money.

Your Social Security, SSDI, or SSI income is exempt from private creditor garnishment under federal law
Two months of directly deposited benefits in your bank account are automatically protected under federal banking rules
Your primary residence is protected from forced sale in most states for consumer debt judgments
Essential personal property (furniture, one vehicle, tools of trade) is typically exempt from seizure under state law
The judgment remains valid and can be revived if your financial situation changes, such as inheriting money or returning to work

"My mom is 72, lives on $1,150 a month in Social Security, and got sued by Midland Funding for a $3,400 credit card. She panicked and thought she was going to lose her benefits. I called a consumer attorney who told me that Midland can win every lawsuit in the country and still cannot touch her Social Security direct deposit. We ignored the lawsuit. Midland got a default judgment. They haven't been able to collect a dime in three years because there's nothing to collect." Reddit r/SocialSecurity · credit card lawsuit Social Security thread Default judgment entered. Three years later: zero collected. Social Security untouched.

Can a Credit Card Company Garnish Your Social Security Check?

No. Private creditors, including credit card companies, debt collectors, and debt buyers, cannot garnish your Social Security check or direct deposit for consumer debts. This protection is written directly into federal law under Section 207 of the Social Security Act.

The law also applies to Social Security Disability Insurance (SSDI). Supplemental Security Income (SSI) has even stronger protection. SSI cannot be garnished by anyone, including the federal government, for anything except Social Security Administration overpayments.

Only four categories of creditors can touch your Social Security:

The IRS, for unpaid federal taxes (up to 15% of your benefit)
The federal government, for defaulted federal student loans (up to 15%)
State child support enforcement agencies, for overdue child support (up to 65%)
Courts, for overdue alimony (up to 65% combined with child support)

A credit card bill falls into none of those categories. No matter what a debt collector tells you, no court order they could ever obtain allows them to take your Social Security income.

Who Can (and Cannot) Touch Your Federal Benefits Source: CFPB, 42 U.S.C. § 407

Creditor Type	Can Garnish Social Security?	Can Garnish SSDI?	Can Garnish SSI?	Maximum
Credit card companies	No	No	No	None. Federal law prohibits this.
Medical bill collectors	No	No	No	None. Same federal protection applies.
Personal loan lenders	No	No	No	None. Same federal protection applies.
IRS (federal taxes)	Yes	Yes	No	Up to 15% via Federal Payment Levy Program
Dept. of Education (student loans)	Yes	Yes	No	Up to 15% after due process notice
Child support enforcement	Yes	Yes	No (SSI fully exempt)	50 to 65% depending on dependents and arrears
Alimony (court-ordered)	Yes	Yes	No	50 to 65% combined with child support

Sources: 42 U.S.C. § 407 (Social Security Act), CFPB Federal Benefits Garnishment Guidance (updated January 2024), Bankrate Social Security Creditor Rules (March 2025), Kiplinger Social Security Garnishment Guide (March 2026). SSI = Supplemental Security Income. SSDI = Social Security Disability Insurance.

"Getting calls from a collection agency about a credit card from years ago. I'm 68, retired, SS is my only income. My bank account has nothing but the SS deposit each month. A friend told me they can't touch it. I looked it up and confirmed: 42 USC 407, clear as day. They can sue me, get a judgment, and still can't touch my Social Security. I stopped answering their calls. They haven't filed a lawsuit. They probably looked up my income and determined it wasn't worth filing." Reddit r/personalfinance · retired on Social Security credit card debt thread Income confirmed exempt. No lawsuit filed after collector investigated collectability. Calls stopped.

What Happens When a Credit Card Company Sues You and You Have No Money

Lawsuit filed

Collector files in state court. You are served with a summons. You have 14 to 30 days to respond depending on state and court.

Act within deadline

Judgment entered

If you ignore the summons, a default judgment is entered automatically. If you respond and they can prove the debt, a judgment may be entered after a hearing.

SS income still safe

Collection attempt

Collector tries to enforce the judgment. They look for bank accounts, property, and income sources they can reach. Your SS direct deposit is off-limits.

Protected by 42 U.S.C. § 407

Judgment dormant

If they cannot collect, the judgment sits. Most state judgments last 10 years and can be renewed. If your situation changes, they may try again later.

Monitor any asset changes

The sequence looks frightening on paper. But for someone whose only income is Social Security, step three produces nothing. The collector ran a judgment that is effectively unenforceable against your current situation.

What they can still do is damage your credit report. The default judgment appears as a public record. The original collection account appears separately. Both stay for seven years. Your ability to borrow, rent an apartment, or in some states pass certain background checks may be affected. But your ability to receive your Social Security check and pay your bills is not.

The bank account exception is real. Protect yourself from it. Even though your Social Security income is exempt from garnishment, your bank account is not automatically untouchable forever. Federal law protects two months of directly deposited benefits. If your account holds more than two months of benefits, the excess can be seized. If you mix Social Security with other income in the same account, the protection becomes harder to prove. Keep your Social Security in a dedicated account and receive it by direct deposit only.

What a creditor CAN still do after a judgment

Place a lien on real property you own (except homestead in most states)
Levy bank account funds beyond two months of direct-deposited SS benefits
Freeze your account temporarily, forcing you to prove funds are exempt
Renew the judgment every 10 years and try again if your situation changes
Report the judgment to credit bureaus, damaging your score for 7 years
Seize non-exempt personal property above your state's exemption limit

What a creditor CANNOT do

Garnish your Social Security check, SSDI, or SSI for consumer debt
Touch two months of directly deposited SS benefits in your bank account
Force the sale of your primary residence in most states for credit card debt
Arrest you or threaten arrest (illegal under the FDCPA)
Threaten to take your benefits if they know SS is your only income
Seize SSI under any circumstances (strongest protection, zero exceptions for private debt)

If you have received a collection lawsuit summons and are unsure whether to respond or let a default judgment be entered: Sued by Mandarich Law Group? Here Is What to Do covers how high-volume debt collection law firms operate, what they must prove to win, and why the chain-of-ownership challenge is often the strongest defense even for people on fixed incomes.

What Is the Lowest Amount a Debt Collector Will Sue For?

There is no legal minimum. A collector can technically sue you for $50. The practical threshold is driven by economics, not law.

Filing a lawsuit involves court fees, attorney time, and service costs. Debt collectors typically will not sue for amounts under $1,000 because the recovery does not justify the expense. The sweet spot for most collection law firms is $1,000 to $5,000. Balances above $5,000 have high lawsuit probability.

However, large-volume debt buyers like Midland, Portfolio Recovery, and LVNV use automated systems that file lawsuits in bulk at very low per-case cost. These firms sue for amounts as low as $700 to $800 regularly, especially in states with low filing fees and high default judgment rates. In some jurisdictions, the filing fee is under $50, which makes small-balance lawsuits profitable if even 20% of defendants pay after receiving the summons.

If you live on Social Security, your income is the most important factor. A collector who discovers your only income is protected federal benefits may choose not to file. They know a judgment gives them nothing to collect. But they may also file anyway, hoping you ignore the summons and they get a default judgment they can try to enforce if your situation ever changes.

For a breakdown of when collectors cross the threshold from calls to court action on smaller balance accounts: Can a Debt Collector Sue You for $500? covers the economics of small-balance lawsuits, which states have the most small-claim debt filings, and what happens if you do not respond to a summons for a debt under $1,000.

Can You Go to Jail If a Credit Card Company Sues You?

No. Credit card debt is civil, not criminal. You cannot be arrested or imprisoned for not paying a credit card bill, even after a judgment is entered against you. Debtors' prisons were abolished in the United States in 1833.

The one scenario where debt and arrest intersect is civil contempt of court, which is different from the debt itself. If a court orders you to appear for a debtor's examination after a judgment and you ignore that court order, a judge can hold you in contempt and issue a warrant. You would be held in contempt of the court order, not for owing money. The debt itself cannot put you in a cell.

Any debt collector who tells you that you will be arrested for not paying a credit card is violating the FDCPA. That threat is illegal. You can report it to the CFPB and sue the collector for up to $1,000 per violation in statutory damages, plus attorney fees paid by the collector.

"Collector called my mother, who is 74 and on SSDI, and told her she would be arrested and her benefits would be suspended if she didn't pay $2,100 by Friday. She was terrified. I reported it to the CFPB. Also filed a complaint with our state AG. A consumer attorney took the case on contingency. That one call produced two separate FDCPA violations: the arrest threat and threatening to take protected benefits. We settled for $2,000. The debt was never paid." Reddit r/legaladvice · FDCPA violation SSDI arrest threat thread Two FDCPA violations. $2,000 settlement. Debt never paid. Collector paid attorney fees.

How to Get a Credit Card Lawsuit Dismissed on Social Security

Even if you are judgment-proof, responding to a lawsuit often produces a better outcome than ignoring it. Here is why.

When you file a written Answer, the collector knows the case will be contested. Many walk away or settle for a reduced amount rather than pay attorney time for a hearing. You can raise the following defenses in your Answer:

Expired statute of limitations: If more than 4 to 6 years have passed since your last payment, depending on your state, the debt is time-barred. The lawsuit should be dismissed.
Lack of standing: The debt buyer must prove they legally own the debt with a valid chain of assignment from the original creditor. Many cannot produce complete documentation for individual accounts purchased in bulk.
Inaccurate balance: If the amount includes improper fees, interest, or charges not supported by the original agreement, you can challenge the figure.
Protected income declaration: You can proactively inform the court that your only income is Social Security, which limits what any judgment could practically accomplish.

Gurstel Law Firm is one of the high-volume collection law firms that frequently files suits against consumers on fixed income. Their cases often rely on default judgments because many defendants never respond. If you have received a summons from Gurstel or a similar firm, see our guide on responding to a Gurstel Law Firm lawsuit, which covers the specific documentation they typically rely on, how to challenge chain of ownership, and what a contested Answer typically produces compared to a default.

ASAP Credit Repair USA

Living on Social Security With a Lawsuit or Collection on Your Report? Know What Can Actually Hurt You.

A credit card company can win a judgment and still not touch your Social Security. But the judgment entry and the collection account are damaging your credit report right now. A free 3-bureau audit shows every error in those entries that is disputable regardless of whether the underlying debt is valid.

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What Two Debts Cannot Be Erased?

This is a question about bankruptcy, where most consumer debts including credit cards can be discharged. Two major categories of debt survive bankruptcy and cannot be erased in most circumstances:

Federal student loans. Student loan debt is generally non-dischargeable in bankruptcy unless you can prove "undue hardship," a difficult standard that requires showing you cannot maintain even a minimal standard of living if required to repay. Courts apply this standard narrowly. Most borrowers cannot meet it.

Child support and alimony. Domestic support obligations are completely non-dischargeable in both Chapter 7 and Chapter 13 bankruptcy. No bankruptcy filing removes the obligation to pay court-ordered child support or alimony. These are also the debts that can reach your Social Security income, unlike credit card debt.

Other debts that generally survive bankruptcy include recent federal and state income taxes, debts from fraud or willful misconduct, criminal fines and restitution, and student loans from most lenders. Credit card debt, medical bills, personal loans, and most consumer debts are dischargeable in Chapter 7 bankruptcy.

If the debt you are being sued over is years old and you are not sure whether the statute of limitations has expired: Can a Debt Collector Sue You for a 10-Year-Old Debt? covers how zombie debt buyers pursue old accounts, what the statute of limitations means for your defense, and why raising the expired SOL in your written Answer is the strongest single move available for time-barred debt lawsuits.

How to Get Rid of Credit Card Debt With No Job or Fixed Income

Being judgment-proof means collectors cannot reach your income. But the debt itself does not disappear. Here are the realistic paths for someone living on Social Security or disability with significant credit card debt:

Do nothing if you are fully judgment-proof. If Social Security is your only income and you own no significant assets, a creditor who wins a lawsuit gains almost nothing. The debt reports to the credit bureaus for seven years, but your check stays intact. Many attorneys who work with seniors advise that if someone is truly judgment-proof, ignoring the debt is a legitimate financial strategy.

Negotiate a hardship settlement. If you have some savings or a small amount available, collectors often accept 25 to 50 cents on the dollar from people on fixed income. They know a judgment gives them little leverage against you. A lump-sum offer with proof of your limited income can be persuasive. Get any settlement in writing before sending money.

File Chapter 7 bankruptcy. If the debt is large and you want to eliminate it permanently, Chapter 7 discharges most unsecured debt in 3 to 6 months. Qualifying is straightforward on Social Security income because the means test typically passes easily when your income is below the state median. Filing also creates an automatic stay that immediately stops all collection calls and pending lawsuits.

Wait for the statute of limitations to expire. Once the SOL passes, collectors cannot win a lawsuit in court. The debt may still appear on your credit report for up to seven years from the date of first delinquency, but the legal threat is gone. In most states the SOL is 3 to 6 years. In Texas it is 4 years.

"67 years old, widowed, $1,100 a month in Social Security. $22,000 in credit card debt I accumulated after my husband died. I was getting 12 to 15 calls a day. Talked to a bankruptcy attorney. He told me I'd qualify for Chapter 7 easily, all the card debt would be discharged, and my Social Security would never be at risk. Filed, discharged in four months. The calls stopped the day I filed. I wish I had done it two years earlier instead of living in fear." Reddit r/personalfinance · Social Security Chapter 7 bankruptcy experience thread $22,000 discharged. Zero Social Security impact. Calls stopped day of filing. Four months to discharge.

Can Credit Card Companies Garnish Retirement Income?

It depends on the type of retirement income.

Social Security retirement benefits: Protected from private creditor garnishment under federal law. No exception for credit card debt. Same protection as SSDI.

401(k) and IRA accounts: Generally protected from creditor claims while in the account under federal ERISA law, but state exemptions vary after withdrawal. Money taken out of a 401(k) and deposited into a regular bank account may lose its protected status depending on your state.

Pension income: Federal Civil Service Retirement System (CSRS), Federal Employee Retirement System (FERS), and military retirement pay are generally protected from private creditor garnishment for consumer debts under federal law.

Private pension income: Protection varies by state. Some states fully exempt pension income from creditor claims. Others do not. Check your state's exemption laws specifically.

VA disability benefits: Protected from private creditor garnishment under federal law, same as Social Security.

People Also Ask

Can a credit card company sue you if your only income is Social Security?

Yes. A credit card company or debt buyer can sue anyone, regardless of income source. There is no legal barrier that prevents them from filing a lawsuit against someone on Social Security. However, winning that lawsuit gives them almost nothing they can practically collect. Under 42 U.S.C. § 407, Social Security income is exempt from garnishment by private creditors even after a court judgment. If Social Security is your only income and you have no significant non-exempt assets, you are effectively judgment-proof.

Can my Social Security be garnished for a judgment?

Not by a private creditor for consumer debt. Even after a court enters a judgment against you for credit card debt, medical bills, or a personal loan, your Social Security income remains protected under federal law. The only creditors that can garnish Social Security are: the IRS for federal tax debt (up to 15%), the Department of Education for defaulted federal student loans (up to 15%), and state agencies for overdue child support and alimony (up to 65%). SSI has even stronger protection and cannot be garnished for any of those debts either.

Can a credit card company sue you if you're on disability?

Yes, they can file a lawsuit. But your SSDI or SSI income is protected from garnishment by the same federal law that protects Social Security retirement benefits. If SSDI is your only income and you have limited assets, you are likely judgment-proof. Even a default judgment against you cannot reach protected federal disability benefits received by direct deposit. SSI has the strongest protection of all and cannot be garnished for any private debt under any circumstances.

How long can Social Security be garnished for a civil lawsuit?

It cannot be garnished for a civil lawsuit by a private creditor at all. This is not a time-limited protection. It is a permanent exemption under federal law. The only civil matters that can result in Social Security garnishment are child support and alimony obligations, which are not consumer debts. The federal government can garnish Social Security for back taxes and defaulted federal student loans, but a private credit card company that wins a civil lawsuit has no mechanism to ever access your Social Security income.

What is the lowest amount a debt collector will sue for?

Debt collectors can technically sue for any amount. There is no legal minimum. In practice, most do not pursue lawsuits for amounts under $1,000 because the legal costs exceed the likely recovery. Balances between $1,000 and $5,000 are in a gray zone where some collectors will sue and others will not. High-volume debt buyers who use automated systems sometimes file suits for amounts as low as $700 in jurisdictions with low court filing fees and high default judgment rates. If your income is protected federal benefits, they may decide not to sue at all once they assess that any judgment would be uncollectable.

What two debts cannot be erased in bankruptcy?

Federal student loans cannot be discharged in bankruptcy for most borrowers, unless they prove undue hardship in a separate legal proceeding, which courts approve only in rare cases. Child support and alimony are also completely non-dischargeable in both Chapter 7 and Chapter 13 bankruptcy. Credit card debt, medical bills, personal loans, and most consumer debts are dischargeable in Chapter 7 bankruptcy, which is why many people on fixed incomes with large credit card balances find Chapter 7 to be an effective path to a clean financial start.

How to get rid of credit card debt with no job or income besides Social Security?

You have several options based on how large the debt is and whether you own any assets. If you are fully judgment-proof with no non-exempt assets, some attorneys advise simply stopping payments and waiting out the debt, because a creditor who wins a judgment still cannot reach your Social Security income. If you want to eliminate the debt permanently, Chapter 7 bankruptcy discharges most unsecured debt including credit cards in 3 to 6 months, and most people on Social Security income easily meet the means test. If you have some savings, negotiating a lump-sum settlement at 25 to 50 cents on the dollar is possible when collectors know your income is protected.