Creditors use loophole to seize protected benefits

[Swede]

What a surprise.


snip-



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.

http://www.google.com/hostednews/ap/article/ALeqM5gjcEHG52OlY-VHAHw9BXNzpMpN4QD98IKSH80

[notadmblnd]

1. wouldn't they have to have access to your bank information first?

[Swede]

2. You did read the part about court orders etc before posting this,

I hope.

[notadmblnd]

4. I did. And that is still my question

So they have a court order. Are the courts ordering debtors to disclose this information to the lien holder? How do the courts find out the bank account numbers?

[Lyric]

5. The court order goes to the bank, and the bank furnishes the information.

[notadmblnd]

6. I'm not trying to be anal here, however,

how do the courts know which bank? Does a message go throughout the financial sector saying any and all accounts by so and so must be frozen or does the court order the person who owes the debt to provide the info?

[Lyric]

7. During the hearing, the defendant is asked pertinent information

such as that, so that it goes down on permanent record. Beyond that, if a defendant skips the hearing or refuses (which would be stupid, as he/she would be held in contempt), the court has access to federal databases of information linked to our Social Security numbers, in which info gathered from law enforcement, the IRS, the Department of Education, Social Security, credit reporting agencies, etc. is stored. Finding out which bank we use isn't difficult for the government, and the court has the authority to access it with a court order, no problem.

Edit: in fact, I'm pretty sure they do the database search regardless of whether or not the defendant provides account info, as someone could always be hiding another account. Welfare agencies use the same database to determine whether or not someone is hiding assets.

[Skink]

3. 401's are next then IRA's.

[iamtechus]

8. Keep your money out of bank accounts!

If you find yourself in a vulnerable position, simply keep your money out of harm's way.

Q: Do I have to use direct deposit?

A: Social Security strongly encourages all Social Security and SSI beneficiaries to receive their monthly benefits by direct deposit. As of January 2007, 80 percent of all Social Security and SSI beneficiaries received their benefits by direct deposit. You can still receive your Social Security or SSI benefit by check, but you should consider the many benefits direct deposit offers.

http://www.socialsecurity.gov/deposit/DDFAQ898.htm

Also, if you have someone after your assets, see a lawyer about chapter 7 bankruptcy. If you make less than the median income for your family size, you don't have to worry about the recent laws regarding eligibility.