You Can’t Touch This—Banks Must Protect Social Security and VA Benefits From Debt Collectors
May 27 2010
The Treasury Department’s new rules will require banks to protect amounts you receive from Social Security and the VA in your bank accounts from debt collectors and garnishment.
Laws have protected these government funds from creditors in the past, but when faced with a garnishment order, banks would freeze whole accounts. The government funds would be frozen along with the funds eligible for garnishment. Freezing the whole account causes financial hardships and cost time and money. When the whole account is frozen, you have to file a claim to get your government funds released and that’s where the hardship, time and money come in.
Now the bank must determine how much you receive from Social Security and the VA. They can only allow the amount above the government payments to be frozen and made available for the garnishment order. Other government payments are also protected like CSRS and FERS income among others.
These rules are expected to be implemented in the fall or winter. See the Federal Register for details.
