Effective May 1, 2011, there is more protection for
retirees, veterans and disabled persons who use bank
accounts for their federal benefits such as Social Security,
SSI, VA and other federal benefits.
Even though federal and state law protects these benefits
from seizure by private creditors, all too often creditors
obtain court orders that allow banks to freeze bank
accounts containing protected funds. A beneficiary may
be unable to get urgently needed funds for weeks or
Often, the paper work and procedures needed
to end an illegal freeze prove too daunting for a recipient,
so that the bank turns over supposedly "untouchable"
funds to the creditor.
The Treasury Department's new rule 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 attachment. Protection of more than
two months of benefit payments still requires additional
court filings by the beneficiary.
This information was adapted from a press release issued by
the National Consumer Law Center, www.nclc.org.
It is reprinted with permission from The Alert, a publication of The Legal Aid Society of Cleveland.
Top of Page
Back to Resources for Senior Citizens