Submitted by Anonymous on Wed, 03/03/2010 - 10:47
Posted in
A fellow I play golf with told me that because he has been having some financial issues, his 'advisor' told him to keep his social security payments in a separate account and only move what he needs each month into a 'operating expense' account. Because he mentioned financial problems, I didn't think I should ask him about his reasoning or purpose. But is there a reason to do that?
Editor's Response
Certain types of funds are exempt from debt collection efforts under Massachusetts and federal law, including most government benefits. If a debt collector or judgment creditor attempts to seize Social Security funds, for example, the debtor can go to court and show that the funds are exempt. However, if the debtor has co-mingled exempt funds with non-exempt funds, that fact becomes more difficult to prove. I would guess that (or something like it) is what your golf-buddy is doing: keeping exempt funds segregated to protect them from creditors. For more information about Social Security payments, visit our Massachusetts Social Security Discussion Forum.