Florida Elder Law & Estate Planning Blog
New law protects garnishment of automatic Social Security funds
May 18, 2011
In a perfect world, Social Security funds in your bank account should be immune to garnishment for any unpaid debts. Federal law says so. But in the real world, it happens. A lot.
The National Consumer Law Center estimates that about one million recipients of federal benefits have their benefits frozen by banks each year. When this occurs, seniors have to spend time and money – both of which may be in very short supply – to try to regain access to those funds in their account. This can result in a very desperate situation for those depending on those benefits.
To address the problem, the US Treasury Department has just instituted a new rule that will provide seniors a measure of protection in this situation. As of May 1, when banks receive a garnishment order, they cannot just freeze a depositor’s entire account. They must research whether Social Security benefits have been automatically deposited into the account. If so, the bank is required to leave untouched and protected the last two months of Social Security deposits. This world of ours just got a little less imperfect…