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Tab Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 10:31 PM
Original message
Banks can seize your SSoc and disability benefits to pay debts
A bipartisan group of legislators is pressing the Treasury Department to close a loophole that has allowed banks to seize Social Security and disability benefits from customers' accounts despite federal rules intended to protect these benefits from creditors.

The loophole also has enabled some banks to seize from customers their recent $250 Economic Recovery Payments, payments to disabled veterans, and supplemental benefits to impoverished individuals from the Social Security Administration.

Federal law says creditors can't take Social Security, disability, veterans' and children's survivor benefits to pay a debt. But the federal law doesn't say how money deposited directly into bank accounts is to be protected -- a gap that has given banks the ability to seize such funds.

And when banks receive garnishment orders from debt collectors, they freeze customers' accounts and collect fees, including a charge to freeze the account, as well as overdraft and other charges -- all of which can be taken from Social Security benefits.

The Treasury and Social Security Administration, along with banking regulators, developed proposed regulations early this year that close the loophole. But the regulations are in limbo.

In separate letters in May to Treasury Secretary Timothy Geithner, members of the Senate Special Committee on Aging as well as House members including Barney Frank urged that the Treasury issue regulations to stop banks from freezing benefits and seizing fees.

In a recent hearing before being confirmed as the Treasury's assistant secretary for financial institutions, Michael Barr said one of his first priorities will be to issue "a joint regulation to solve the problem of account freezes and garnishment of exempt funds." Mr. Geithner wasn't immediately available for comment.
Closing a Loophole

The children of Nicole Murphy, above, had their Social Security survivor benefits seized when a creditor garnished the account for the children's unpaid medical bills.

Some customers whose accounts are frozen often don't know their benefit money isn't supposed to be snatched.

Bank of America Corp. froze the accounts of Ellistine and Roosevelt Thompson, a disabled couple in their 60s in Macon, Ga., whose only source of income is from Social Security.

Because the Thompsons had no access to their money, they couldn't retain a lawyer. Bank of America turned over all the benefits, some of which they set aside for their burial, to a debt collector pursuing a debt from the mid-1990s.

The couple learned from a TV news program that creditors can't take Social Security benefits. They contacted Georgia Legal Services Program, which last year sued the bank seeking the return of the couples' money.

A Bank of America spokeswoman declined to comment on the case, saying the court had placed a confidentiality order on it, adding: "Banks are required by law to honor garnishment orders or risk being held in contempt. We freeze accounts because the law says we must when we receive an order to do so."
Closing the Loop
...
Bank fees for handling garnishment orders and freezing accounts can total hundreds of dollars, leaving the person in debt to the bank.

In April, for instance, U.S. Bancorp seized the Social Security survivor benefits of two children in Kalispell, Mont., when a creditor garnished the account for the children's unpaid medical bills (the family has no health insurance). The benefits are the family's primary source of income, following the death of the children's father in 2007.

Unaware that the account was frozen, the children's mother, Nicole Murphy, 32, used a debit card to pay for gas and groceries for Easter. Each purchase triggered an insufficient-fund fee of $37.50. When the children's account fell below zero, the bank debited a negative balance fee of $8 a day.

A lawyer with Montana Legal Services Association helped Mrs. Murphy unfreeze her account. But the bank again froze the account. On May 7, the U.S. Treasury deposited into the account a $250 Economic Stimulus payment, which the government sent to low-income households. But the payment was unavailable to the family because the account was frozen, and because the bank's fees had created a negative balance.


http://online.wsj.com/article/SB124361324245066727.html
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NYC_SKP Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 10:39 PM
Response to Original message
1. I'm about done w/ B of A. I think I'll move it all to a credit union or local bank.
For fuck sake.

recommended.
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Dogmudgeon Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 10:40 PM
Response to Original message
2. No hell too deep, no fire too hot ...
--d!
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depakid Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 11:08 PM
Response to Reply #2
6. Not just for the banksters, but their allies in Congress...
and that may imclude more than a few you'd rather not hear about....
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 10:41 PM
Response to Original message
3. Thanks for this, Tab!
AND, good to 'see' you!!!


:hug:
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 10:45 PM
Response to Original message
4. How does that work logistically?
Is the bank supposed to track sources of cash and separate them out? Does interest also have to be allocated? Sounds kinda complicated.
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grasswire Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 11:02 PM
Response to Original message
5. lesson: cash government checks
Don't direct deposit.
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undergroundpanther Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 11:25 PM
Response to Reply #5
8. I direct deposit.
Edited on Sun May-31-09 11:27 PM by undergroundpanther
I think if direct deposit gets fucked up than checks by mail will be withheld too.At least I can get to my bank at 12:01 am on the first and withdraw it all or at least have a go at it before any banker shows up for work the next day.

That way I don't end up waiting five days to find out I have been screwed,or lose time thinking the mail is slow.Direct deposit to me means I don't have to and wait forever for my check,or twiddle while the banks "clear " the check and I don't have to rely on a check cashing place that will take a big chunk out of it for themselves,just to cash my SSI. I know on the first, that I'm screwn and I can start raising hell about it at 12:04 am.
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grasswire Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 12:07 AM
Response to Reply #8
10. there's no bank to garnish the funds if you get a paper check.
(eom)
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grasswire Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 12:09 AM
Response to Reply #8
11. don't other places cash government checks where you are?
Here, a supermarket will cash a government check with no fee.
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undergroundpanther Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 11:14 PM
Response to Original message
7. The rich always rob the poor,that is why they are rich
Edited on Sun May-31-09 11:17 PM by undergroundpanther
If some banker asshole tries to freeze my account,they'd be in for a hell of a problem,me.Luckily I have no debts.I think credit is usury and is not fair,good sane or anything but pay as you go slavery.What do you think DEBT slavery is. I don't trust any rich people to give a shit about poor people unless they think they'll "get a "return" on the"investment" somehow or get their insatiable egos fed..I am a person with issues I contend with in the best way for ME and if some greedy asshole or some bureaucrat wants me to risk MY mental health so they can get a trickle out of nil..well panthers have claws.And I am not about to be beholden to debt slavery or some rich pig's con game.. And if some rich pig asshole wants to try to wring blood from a stone,well, they'll be the ones paying for pulling that bullshit greed stunt, not me. Eat the fucking rich, bite the hands that take because if you do not do it, they will eat you whole, screaming and alive..all without shame,guilt or remorse.That kind of abusive con game and debt slavery mind fucking is what banking and wall street is all about,folks.Think, if debt slavery in India has duped generations of families into providing free labor as in slavery over there,because of usury gone wild what makes you think the psychopath rich over here won't want get in on that scam too, over here.Plenty of people over here believe in the scam called debt and accept usury.If we didn't credit companies would NOT get away with ANY of this shit.Republican = cheap labor,even slavery, to a fiction called debt, created by this silly lie called interest, which is usury.
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undergroundpanther Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-31-09 11:43 PM
Response to Original message
9. About the $250.00
Edited on Sun May-31-09 11:47 PM by undergroundpanther
People were writing that it was a loan being touted as a stimulus check. When I put up articles about it I was called everything from tin foil to a downer..The rich pigs writing laws were aware of this scam,that they were not 'giving' poor people help, but really intend to take it all back from the poorest,knowing people on SSI SSDI could really USE that money, they screwed us,hooked us into it with a faux dream of 'kindness' of a few extra bucks to survive on.Like the rich EVER gave us anything,because for the most part they do not unless it serves THEM....I think wall street bankers and lobbyists are a bunch of sociopaths.Greed and capitalism made people fall for the idea of no free lunch that people with more are entitled to more. Before we built up this notion of progress,all lunches were free if you could gather it or hunt it.Luckily lunch is still free for wildlife out there.For humans we are not free and we let others take our lunch away and turn a profit from our hunger, because we let sociopathy and sociopathic ideas like capitalism run over our society.

Do you remember that tax break Obama gave us all?That one that has resulted in $13 extra dollars in your check? That tax break. Well there is a little secret that the Treasury and the IRS didnt tell you a lot of people are screwed, me included. They want your money back next year from the tax credit this year! Bend over it is coming!

http://msplaceddemocrat.com/http:/msplaceddemocrat.com/... /
http://www.walletpop.com/blog/2009/01/30/beware-the-sti... -
check-scam/
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boomerbust Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 01:14 PM
Response to Reply #9
18. I am on SSDI
And I got my $250. And I owe federal back taxes. The last stimulus they subtracted off my tax bill. So your post is an epic fail.
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truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 12:42 AM
Response to Original message
12. I was frozenout of the banking system when I rolled out one of my bank accounts
To pay for husband's meds.

Three checks bounced and the charges (On 15 dollars NSF) ended up being over a $ 100 which I will pay when hell freezes over.

So I go to a check cashing place. It costs me 3% of whatever I cash there - a nice tidy three percent. I can cash government checks or local employers checks.
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Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 12:51 AM
Response to Original message
13. Works both ways...
And quite a few people in this country have no way of collecting a judgement against a company, or in some cases a large corporation, without the right to levy a bank account. It works both ways.

If you have a judgement against you, you should be aware that a creditor can levy your bank accounts for payment of the judgement. And they hire people to find out your account history in terms of when you deposit and when you withdraw so they know when to have the levy delivered. Once the levy is placed on your account, you either release the funds to satisfy the judgement or you no longer have a bank account. I am not clear as to the exact process but I know that once a levy is delivered to a bank the bank freezes the account. And it takes either a release from the creditor or a court order to unfreeze the account.

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Usrename Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 03:44 AM
Response to Reply #13
14. I don't see how it works both ways.
If the funds are protected from garnishment then they should not be seized.

What funds do those companies or corporations that you are talking about have, that are supposed to be protected against seizure, and yet are being improperly seized?

That would be both ways, wouldn't it?
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Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 01:54 PM
Response to Reply #14
19. The right to collect judgement....
These are not cases of a creditor merely seizing funds. These are cases of a creditor using the legal means to collect a judgement. It's called levy. The IRS uses it. As do others who are willing to hire an attorney to go back into court and obtain an order allowing them to levy an account.

If I sue American Express and am awarded a judgement I should have the right to levy their account to collect that judgement.

If American Express sues me and is awarded a judgement, they should have the same right.

This will happen more and more as a result of "bankruptcy reform" which was supported by quite a few Democrats as well as Republicans.

It used to be a simple matter of filing for bankruptcy protection which allowed you to have debts "discharged" meaning the creditor could no longer pursue payment of the debt.

Bankruptcy is no longer such a simple matter. You can now be forced to pay back the debts. In some cases you can be forced to sell your home if there is sufficient equity to cover debts. And you can find yourself having your accounts levied to satisfy a judgement if you do not enter into some sort of agreement with the creditor. Sometimes on the order of a federal judge in a bankruptcy.

Who do you think lobbied for "bankruptcy reform" more than anyone else? The credit card companies along with the health care industry.
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wellstone dem Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 07:21 AM
Response to Original message
15. God blesses the poor who have a lawyer--it was legal aid lawyers who made the difference
Fund Legal Aid.
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WePurrsevere Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 08:35 AM
Response to Original message
16. "Protecting Your Social Security and Pension from Creditors"
Edited on Mon Jun-01-09 08:40 AM by WePurrsevere
FWIW there's a LOT of very good information here on how to protect your SS and Pension.
http://online.wsj.com/article/SB124379784128669905.html

Also it wouldn't hurt to write Obama, Treasury Secretary Timothy Geithner and members of the Senate Special Committee on Aging and ask them to get their backsides in gear.

B-)
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Hatchling Donating Member (968 posts) Send PM | Profile | Ignore Mon Jun-01-09 11:17 AM
Response to Reply #16
17. Excellent article! Thank you!
It led me to this page of the Social Security Administration:

Get Your Benefit Payment Through The Direct Express Card

http://www.ssa.gov/pubs/10073.html#6
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WePurrsevere Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jun-02-09 09:39 PM
Response to Reply #17
22. You're very welcome. :-) My husband and I...
are on SSD and although we're very happy with our credit union so far we've considered going with the card. We still may but I need to learn more about it first. Thanks for the direct link, now I won't have to go hunting for it. B-)

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Wednesdays Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 06:18 PM
Response to Original message
20. K&R
:kick:
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MasonJar Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jun-01-09 10:06 PM
Response to Original message
21. The bank knows if the check is Social Security.
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