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Garnishment of Social Security and SSi after May 1, 2011

Posted by attorney Steven Harms

It has always been improper to take anyone’s SS or SSI or similar benefit from a bank or credit union pursuant to a garnishment ...the change you may be hearing about, which supposedly took place on May 1 made it more of a requirement for banks and other financial institutions to identify and exclude those funds from disclosures (the funds are being “tagged electronically" somehow) as the financial institution usually doesn’t KNOW what funds are garnishable and what funds are excluded. Some banks have been disclosing (that is, holding for the creditor) all the deposited funds, requiring the parties to fight about what should be excluded. Some banks have been attempting to disclose only exempt funds...the practice by banks has varied widely, to be blunt about it...and the practice from state to state has also varied widely. The May 1st requirements may put a big burden on these financial institutions not to disclose any excluded funds. So, while creditors shouldn’t have been able to get at excluded funds, such as social security benefits, prior to May 1st…the confusion lies in the new requirement for banks to be more proactive in excluding those funds from any garnishments. There may be some further clarifications of the changes in how garnished financial institutions of individuals (not businesses) are to be handled....if I get any, I'll post 'em for you. That’s my understanding. This is not legal advice, merely my comments and casual statements.

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