Washington DC Metro Injury & Disability Lawyer & Attorney : Greenberg & Bederman : Accidents, Falls, Medical Malpractice : Maryland, DC, Virginia

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Is my bank violating federal law when they allow my creditors to garnish my Social Security funds?

You’ve been disabled for quite some time, and have developed a sizeable debt while waiting to be awarded Social Security disability benefits. Once you’ve started receiving your benefits, is there any way that your creditors can access your disability payments?

A creditor is permitted, in certain situations, to initiate garnishment of accounts to resolve debts. However, certain types of funds are considered “Protected Funds;” Social Security benefit checks and disability payments are two types of protected funds.

Unfortunately, the Social Security Administration’s Office of the Inspector General has found that some financial institutions have violated federal law by permitting creditors to garnish accounts that receive Social Security benefit checks or disability payments.

The results of this report are shocking: Nineteen financial institutions had garnished funds from 1,686 accounts receiving only direct-deposited Social Security benefits for a total of about $1.1 million!

“Millions of beneficiaries rely on Social Security benefits as their only source of income for basic needs such as housing and food. When a creditor’s garnishment order is enforced and these federal finds withheld, the lives of a vulnerable segment of the population are places at risk.”

Access the entire report at report.

When is my bank allowed to permit someone to access my Social Security funds?

According to the Social Security Administration, a financial institution can access protected government benefits only under the following five conditions:

· To collect child support and/or alimony obligations. Section 459 of the Act (42 U.S.C. §659)

· To collect unpaid federal taxes as the result of an IRS levy. Section 6334 (c) of the Internal Revenue Code (26 U.S.C. §6334 (c))

· If the government beneficiaries elect to have a percentage of their benefits withheld and paid to the IRS to satisfy their federal income tax liability for the current year. Section 3402 (p) of the Internal Revenue Code (26 U.S.C. §3402(p))

· To pay a federal agency a non-tax debt the beneficiary owes to that agency. 31 U.S.C. §3716

            · To collect overdue federal tax debts by levying up to 15 percent of each monthly payment until

            the debt is paid. Tax Payer Relief Act of 1997 (Public Law 105-34; Title X,

            Subtitle C, Section 1024), (26 U.S.C. § 6331(h))

What do I do if I think my account is being incorrectly accessed?

This report recommends you do the following if you suspect your bank is allowing one of your creditors to hold, freeze, or garnish your account:

            SSA recommends, “If a creditor tries to garnish your social security check, inform them

            that unless one of the five exceptions apply, your benefits can not be garnished. You

            also may want to provide this same information to your financial institution and seek

            legal assistance if you believe it is needed.”