Welfare payments are usually exempt from creditor claims; but again, the state laws on this are not uniform. Some states partially protect welfare payments, others provide no protection. Public assistance programs (Aid to Families with Dependent Children or AFDC) are protected in some states. Welfare payments lose their protection once they’re received and commingled with non-welfare funds. Public assistance payments – such as aid to the blind and aid to the elderly and disabled – are generally protected by state law. The proceeds from the sale or financing of exempt assets that are used to acquire non-exempt assets also lose their protection.
Social Security and disability income payments aren’t lawsuit-proof. Social Security is not considered a pension under the Employee Retirement Income Security Act (ERISA) and therefore is not federally protected. A creditor’s right to garnish Social Security checks depends entirely upon state law. Bankruptcy or encumbering these monies due to you are the two best solutions.