The Treasury Department has released rules intended to protect banks and other creditors from seizing Social Security or veteran’s benefits funds from recipient’s bank accounts. Current law prevents creditors from taking Social Security benefits from an individual to satisfy a debt, however once those funds are deposited into the individual’s bank account they are no longer protected.
The new rules would change that. The new rules will be issued jointly by the Treasury Department, the Social Security Administration, the U.S. Dept. of Veterans Affairs, the Office of Management and Budget, and the Railroad Retirement Board.
They will require banks that receive garnishment orders to review the individual’s accounts to see if they deposited federal benefit monies within the past 60 days. If so, the full amount deposited from the federal benefits must be protected by the bank, even if the money has already been spent.
The new rules are open for comment, and are expected to become law if there are no issues. The intention is to protect seniors and others who depend on federal benefits – including Social Security disability benefits – to pay for their food, shelter, and medicine. Without these rules, creditors are able to garnish bank accounts of disabled individuals who are sometimes left with no money to survive.