What the exemption protects
Certain income or benefits may be protected from garnishment or other enforcement. Federal and state rules differ, and exceptions can depend on the benefit and type of obligation.
Protection of funds does not necessarily cancel the debt. It also does not determine whether those funds are taxable. These are separate legal questions.
A U.S. federal-benefit example
Treasury rules require financial institutions receiving qualifying garnishment orders to review certain directly deposited federal benefits and calculate a protected amount. Covered benefits include Social Security, SSI, and certain veterans' and retirement benefits.
The automatic protection generally uses a two-month lookback and is limited by the account balance at review. Different procedures or exceptions can apply, including for certain government or child-support orders. Other protections may need to be asserted separately.
Collection handling
Record a report of protected income and route enforcement questions for qualified review. Do not infer that all funds are reachable, or that an exemption permits pressure to use protected benefits.
Consumers receiving court papers should review response deadlines and seek appropriate assistance even when they believe their income is protected.