June 15, 2009 • June Walbert
Q: June, I am a disabled veteran. I served with the Marines in Vietnam, spent 21 years in the Marine reserves and was activated for over eight months during 1991 (first gulf war). I retired from the reserves as a master sergeant (E-8) in 1992.
I have heard that credit card companies cannot access your Social Security, veteran's disability pay or 401k/403b/IRA distribution. Is this true? What are the mechanics of it? Does it hurt your credit rating etc....any info would be appreciated.
-Mike, Dickinson, Tex.
A: Thank you for your service and sacrifice to and for our great country. Credit card companies can’t directly access anyone’s Social Security, disability, or retirement plan distributions. However, they certainly have an expectation of being paid for items and services purchased using their cards. If you are unable or unwilling to make the required payments it will most definitely be reported to the rating agencies and negatively impact your credit score. If you are having problems making ends meet, I would suggest taking some time to develop a bare bones budget—look for opportunities to reduce spending to free-up resources to apply to your financial obligations, such as credit card debt. If you need a helping hand putting all the pieces together, contact an organization affiliated with the National Federation for Credit Counseling (www.nfcc.org) to help you develop an action plan to get back on top of things. Thanks again for all you have done. I wish you the best.
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