Can the SBA garnish a federal pension?

Several hurricanes ago I accepted a SBA loan, in my name only. My husband and I lost everything we owned in Hurricane Katrina, house, jobs, and a good sized piece of the lot we own. My husband recently received a letter from the SBA stating that they are preparing to garnish his pension (federal retirement)for my debt. I am in the process of filing for bankruptcy. Our sole income is my husband's federal pension. Can this garnishment be done? If so I guess I am about to be bankrupt and divorced!!!

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Sep 29, 2010
Can SBA Garnish a Federal Pension
by: Mary

Thanks for submitting your debt collection question on our Q&A page.

My sources indicate that because an SBA loan is federally guaranteed, the federal government has more than the usual tools at its disposal to collect the money that's owed on the loan and those tools could potentially include intercepting any tax refunds you are entitled to and garnishing your federal pension payments.
I strongly urge therefore that you and your husband meet with a bankruptcy attorney so that the two of you can find out what your options are for protecting his pension. It may be that you will need to file for bankruptcy together.

Please share what happens with your situation in the comments section for this question. We are very interested in hearing how this turns out for you, and your experience can help others who are struggling with debt collectors.

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