Can collection agencies seize my disability payments?

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In Canada, disability payments are safe from collection agencies thanks to provincial and federal laws. This ’exempt income’ means your funds for disabilities can’t be grabbed for debt recovery. However, if you owe taxes or government loans, consult a legal expert for guidance. It’s all about smart consumer protection!

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Question

Can a collection agency take my disability payments? I’m concerned that a collection agency might seize my disability payments to recover a debt.

From: Anonymous Question, Ontario (ON)

Debt Insiders Answer

In Canada, it’s good to know that disability payments are safe from those pesky collection agencies. Thanks to both provincial and federal laws, these social assistance payments fall under what’s called ’exempt income.’ In plain terms, this means the money you receive for disabilities can’t just be snatched away to settle debts — and that’s a relief, ensuring you’re not left short on cash for your daily needs. But, here’s the kicker — if your debt is tied to certain government loans or taxes, the rules might change. So, in these sticky situations, it’s wise to chat with a legal expert or a licensed insolvency trustee to get a clearer picture. Better safe than sorry, right?

From: Insider Scott

Office of the Superintendent of Bankrupty (OSB) Answer

Under Canadian law, specifically the Bankruptcy and Insolvency Act, disability payments are generally protected from seizure by collection agencies. According to section 67(1) of the Act, certain types of income, including social assistance payments and benefits related to disability, are exempt from seizure. Additionally, the regulations under the Act reinforce that such payments cannot be garnished to recover debts. Therefore, collection agencies cannot take your disability payments to recover a debt.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 frequently asked questions related to the topic of whether a collection agency can take disability payments, tailored for a Canadian context:

1. Can a collection agency garnish my disability benefits?

• Generally, no, most private creditors cannot garnish Social Security disability benefits, but there are exceptions for certain debts like back taxes, child support, and federal student loans.

2. Are my disability payments protected from bank levies?

• Yes, disability payments are often protected from bank levies under federal laws, but there are exceptions for specific types of debts such as back taxes and child support.

3. What types of debts can lead to garnishment of my disability benefits?

• Debts such as back taxes, delinquent child support or alimony, past-due criminal restitution payments, and other delinquent debts owed to federal agencies can lead to garnishment.

4. How can I protect my disability benefits from collection agencies?

• You can protect your benefits by ensuring they are directly deposited into a separate bank account, using state exemption laws, and in some cases, filing for bankruptcy.

5. Can a collection agency take my disability payments if I owe money to the government?

• Yes, if you owe money to the government, such as back taxes or federal student loans, a collection agency can take a portion of your disability benefits to satisfy these debts.
  
  

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