New Rule Protects Disability and Social Security Funds from Garnishment

by Staff | May 4th, 2011

May 4, 2011

The U.S. Department of the Treasury issued a new rule that took effect on Monday making it more difficult for creditors to garnish Social Security Disability and Social Security funds from indebted Americans.

According to the new rule, banks and other financial institutions looking to seize funds must leave at least two months worth of benefit payments in the account.

This law safeguards Social Security payments, Supplemental Security Income, and Social Security Disability payments, but does not apply if the person in question owes money to the government—say, for taxes.

Prior to this new law, there were already limitations on creditors garnishing federal funds, but with a court order creditors were permitted to freeze accounts so that funds were inaccessible by account holders for weeks or months. In addition, the National Consumer Law Center says that more than a million consumers experience illegal garnishments each year.

Under the new law, banks can no longer automatically freeze accounts, but must first examine the contents to ensure that federal benefit payments remain available to account holders.

The new law requires creditors to determine which funds are deposited by the U.S. government within the last two months.

Do you believe that enough is being done to protect Social Security funds from garnishment?

If you need help preserving your Social Security benefits, contact the Social Security Disability lawyers at Fleschner, Stark, Tanoos & Newlin.

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