Now, keep up to date
with daily feeds of newly posted stories
about America's Seniors...click on the box
New Treasury Rule protects Social Security,
VA, other Federal Benefits
23, 2011 /PRNewswire-USNewswire/
-- A federal rule issued today that
strengthens protections for bank accounts
used to collect federal benefits is welcome
news for retirees, veterans and disabled
persons, according to a lawyer for the
National Consumer Law Center.
The "interim final" rule, which will take
effect on May
is still open for public comment, will limit
creditors' ability to freeze and take funds
from accounts that contain Social Security,
Supplemental Security Income (SSI), VA and
other federal benefits.
which are legally protected from
court-issued garnishment orders, are
critical to the survival of many recipients.
"We applaud the work of the Treasury
Department and the other agencies to
safeguard these essential benefits, and the
leadership of Sen. Max
this issue," said Margot
Saunders, an attorney with the
"All too often, elders, veterans,
and disability benefit recipients who rely
on these benefits for their basic needs have
been unable to access them for extended
periods because of creditor-imposed
Social Security, Supplemental Security
Income (SSI), VA, and similar federal
benefits are intended to meet beneficiaries'
daily needs. Federal law makes these funds
immune from seizure by creditors.
But in practice, creditors frequently obtain
court garnishment orders so that banks then
freeze bank accounts containing protected
funds. A beneficiary may be unable to access
urgently needed funds for weeks or months.
Often, the paperwork and procedures needed
to end an illegal freeze prove too daunting
for a recipient, so that a bank turns over
supposedly "untouchable" funds to a
The new rule prohibits the practice of
denying beneficiaries access to these
essential funds in bank accounts. It
requires all banks to determine whether an
account contains protected funds. If an
account contains protected funds, the bank
is required to protect two months of benefit
payments from garnishment. Protection of
more than two months of benefit payments
requires additional court filings by the
In announcing the rule, the agencies stated
that its framework could be expanded in
future years to protect other federal
payments such as military retirement.
"There are still many other steps that need
to be taken to make bank accounts safe,"
Saunders said. "But this new rule will give
peace of mind to many elders, veterans, and
disability benefit recipients."
Comments on the new rule may be filed by May
24, 2011, by going to www.regulations.gov and
entering "3206-AM17" in the keyword field.
National Consumer Law Center® is a
non-profit organization that advocates on
behalf of low-income and elder consumers. NCLC
works with thousands of legal services,
government and private attorneys, as well as
organizations, who represent low-income and
elderly individuals on consumer issues.