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New Federal Law Protects Government Benefit Payments From Garnishment

By The Golden Law Group

Federal law has long prohibited creditors from garnishing Social Security, disability and veteran benefits, as well as other payments to disabled and low-income individuals. Unfortunately, banks have not always been careful about making sure frozen bank accounts contained no protected funds.

Because Social Security and other benefit payments are often mingled with other funds in personal bank accounts, banks usually just freeze the entire account claiming they have no way of tracking the source of each dollar. The National Consumer Law Center reports that each month 100,000 low-income people are left destitute because of improper account freezing.

Protecting Protected Funds

Fortunately, a new federal rule that started May 1, 2011 makes things easier for banks by tagging protected benefits with a code for easy recognition. Banks are prohibited from allowing garnishment of protected funds from the previous two months. After two months the funds are fair game to creditors seeking payment on open debts.

This new rule will protect the most financially vulnerable people from having a bank account improperly frozen. Getting an account unfrozen can take months and require money for an attorney. This can be difficult for many people and often compounds their financial woes.

No More Excuses

Banks will no longer have an excuse for improperly freezing protected deposits. Bank customers who receive Social Security, disability and veteran benefits can now breeze a little easier knowing their rent and grocery money cannot be taken away in a flash. Nevertheless, improper garnishing is bound to continue. If this happens to you, contact a Florida debt relief attorney immediately to learn your options and protect your rights.


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