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Social Security and VA Benefits inadequately
protected in Banks
A loophole in federal banking rules exists, allowing
nefarious creditors to garnish retirees’
Social Security and Veterans’ benefits.
While federal law is designed to protect these benefits
from most creditors, several bill collectors
have legally manipulated banks into
temporarily freezing their customers’
accounts while the issue is sorted out.
This ploy by creditors has intensified since the
substantial increase in direct deposit,
which is used by 80% of Social Security
recipients. Lawmakers from both parties are
calling upon the Obama Administration to
issue new, tighter regulations to prevent
some banks from seizing funds that were
placed in an account via direct deposit.
Sen.
Herb Kohl
(D-WI), Chairman of the Senate Special
Committee on Aging, and other lawmakers have
introduced a bill that would stop further
promotion of the direct deposit programs for
Social Security and veterans' benefits until
the Treasury Department issues rules to
protect the benefits from creditors.
“The Alliance recognizes the vulnerability
of direct deposit for retirees, and it is
imperative that we press the Department of
Treasury to close this existing loophole,”
said
Barbara J. Easterling,
President of the Alliance, in support of
Sen. Kohl’s bill.
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