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| Creditors Use Loophole to Seize Protected Veterans Benefits |
| 2009-06-03 |
| Bill collectors are exploiting a legal loophole to seize Social Security and veterans' benefits even though federal law is supposed to protect the payments from creditors. Lawmakers from both parties who have been pressing the Treasury Department for years to close the loophole with new regulations are growing impatient. The Obama administration is now promising action but has offered no timetable for developing the new rules. Federal law has long protected Social Security and veterans benefits from most creditors, with a few exceptions for child support, alimony, unpaid federal taxes and debts to other federal agencies. But creditors have been seizing the payments anyway by getting court orders to freeze and garnish bank accounts that receive the benefits through direct deposit. Activists say the issue has festered for years, but has intensified as more recipients get their benefits deposited directly into bank accounts. Many people who receive Social Security or veterans benefits can't afford to have their bank accounts frozen for even a short period of time, said Margot Saunders of the National Consumer Law Center. It's hard to hire a lawyer to get your money back when all your resources are frozen, she said. "They take all your money, and they take it illegally," Saunders said. "But when you live on $700 or $800 a month and have all that money garnished, there's very little recourse." Over a 12-month period in 2006-2007, an estimated $178 million was garnished from bank accounts that included a mixture of Social Security benefits and other deposits, according to the Social Security Administration's inspector general. "Some banks are doing the right thing to protect their customers by denying creditors' requests to freeze and garnish accounts with Social Security funds, but too many banks are not," Sen. Herb Kohl, D-Wisc., chairman of the Senate Special Committee on Aging, said this week. "We need our banking regulatory agencies to recognize this widespread problem and start enforcing the law," he said. Kohl 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. More than 80 percent of the 51 million Social Security recipients get their payments through direct deposit. Years ago, the government forced many benefits to be direct deposit. |
| Posted by:Anonymoose |
| #3 P2k makes a great point that the internet has given free speech a new and powerfull boost. |
| Posted by: 49 Pan 2009-06-03 11:06 |
| #2 Great point P2k. |
| Posted by: tipover 2009-06-03 10:54 |
| #1 "Some banks are doing the right thing to protect their customers by denying creditors' requests to freeze and garnish accounts with Social Security funds, but too many banks are not," Stupid Activists are awaiting bureaucrats who, as we've seen with TARP and the Bailout, are more concerned with the money men than with the citizens. Would it be too difficult for the activists to simply collect the name of the banks that do freeze [and for that matter those who refuse to freeze] these accounts to be identified and their names plastered all over the internet? If the bureaucrats in Washington felt the heat on messing with Veterans benefits, just imagine what the negative impact that will have on a bank's reputation. No amount of commercial advertising money will displace that stain. And we might get a little bit of collateral damage by identifying who received their campaign donations. |
| Posted by: Procopius2k 2009-06-03 10:33 |