Your rights in protecting federal benefits in your bank account against garnishments
When you are unable to pay back a debt to a creditor, he may sue you in a court of law and get the order that your wages or the money in your bank account be garnished to pay back the debt. When this happens, the bank freezes the amount of money in your account and you are not able to access it. If you cannot subsequently reverse the garnishment order from the court, these funds are used to pay back the creditor. You should understand that typically any federal benefits that you receive such as Social Security amount, unemployment benefits etc. are exempt from garnishment. You can usually prevent these amounts from being garnished and used to pay back the creditors although you may have to go to court and get the order from the judge in order to do so.
The federal benefits that are ordinarily exempt from punishment are as follows. The Federal Trade Commission which is the nation’s consumer protection agency gives out the following list of federal benefits that are exempt from garnishment.
- Social Security benefits
- Supplemental security income benefits
- Veterans benefits
- Civil service and federal retirement and disability benefits
- Military military amenities and survivors benefits
- Student assistance
- Railroad retirement benefits
- Merchant seaman wages
- Longshoremen’s and harbor workers death and disability benefits
- Foreign service retirement and disability benefits
- Compensation for injury, death, or detention of employees of US contractors outside the US
- Federal emergency management agency federal disaster assistance.
However, there are certain cases in which even these funds which are typically protected against garnishment may be used to pay off your certain debts and other financial obligations. For example, these federal benefits may be used to pay unpaid federal or state tax. They may also be used to pay a student loan. Your Social Security benefits may be used to make payments on child-support or alimony.
The law governing the federal benefits and the provision for its garnishment differs from one state to another. For complete information and better management of a situation such as this, you should consult an attorney who practices in your state. You can also get additional information from local consumer protection agencies or a legal aid office in your area.