In accordance with 11 U.S.C. 362(b)(2)(C), SSA will continue to withhold benefits
            to honor a properly served order to garnish Title II benefits for child support or
            alimony, even if a beneficiary files a petition for bankruptcy.
         
         There are two scenarios that we must be aware of when considering bankruptcy in relation
            to garnishment cases:
         
         
            - 
               
                  •
                  
                     SSA is an exempt creditor; the bankruptcy petition does not affect SSA in its findings
                     
                     
                   
                
             
            - 
               
                  •
                  
                     SSA is a non-exempt creditor; the bankruptcy petition seeks to direct SSA by its findings
                     
                     
                   
                
             
         
         Status as an exempt or non-exempt creditor is listed in the bankruptcy petition.
         
            
               1. If a bankruptcy petition is filed exempting Social Security as a creditor
               
             
            
               
                  - 
                     
                        •
                        
                           Continue garnishment withholding and payover in the Court Ordered Garnishment System
                              (COGS).
                           
                           
                         
                      
                   
                  - 
                     
                        •
                        
                           Annotate COGS remarks to indicate that a bankruptcy petition has been filed for the
                              affected beneficiary (include the bankruptcy case number).
                           
                           
                         
                      
                   
               
             
          
         
            
               2. If a bankruptcy petition is filed which does not exempt Social Security as a creditor
               
             
            
               
                  - 
                     
                        •
                        
                           Continue garnishment withholding;
                           
                         
                      
                   
                  - 
                     
                        •
                        
                           Stop payover in COGS (see SM 00832.250 or MSOM SPECPAYSYS 003.008;
                           
                         
                      
                   
                  - 
                     
                        •
                        
                           Annotate COGS remarks to indicate that a bankruptcy petition has been filed for the
                              affected beneficiary and that SSA is not exempted (include the bankruptcy case number);
                           
                           
                         
                      
                   
                  - 
                     
                        •
                        
                           Refer the case to the Office of General Counsel (OGC) to determine whether continued
                              garnishment of benefits is appropriate; and
                           
                           
                         
                      
                   
                  - 
                     
                        •
                        
                           Follow OGC’s response for guidance in how to handle the garnishment of the case in
                              question (for COGS manual adjustment instructions, see SM 00832.340).
                           
                           
                           NOTE: Pay particular attention to the consideration of Social Security’s status as an exempt
                              creditor. It is possible that a child support or alimony obligation could be considered
                              as part of a reorganization plan and that the bankruptcy court might attempt to address
                              these obligations as part of that plan. In these cases, forward the order to OGC to
                              ensure that double garnishment does not occur.