Senior citizens who had their direct deposits of Social Security either seized or freezed by banks will now have additional protections under the law to prevent it from happening in the future.
Some time ago, I issued a warning to recipients of Social Security, Supplemental Social Security, veterans’ payments and other federal benefits that they should stop receiving direct deposit of these funds.
The problem was that these funds were being scarfed up by banks and collectors on a whim, even though there had been a law in place to prevent just this from happening.
The U.S. Treasury has now put new rules into effect to govern this area. The new rules make it clear as all get out that banks are committing a crime if they seize direct deposit funds of Social Security and other government benefits. I feel comfortable enough with this new development to now lift my warning.
But looking back, how many seniors and veterans were impacted by the shenanigans of banks and collectors in this respect? The best guesstimate is over one million vulnerable seniors each year. That’s money they needed to eat, or to pay for medication, that was illegally stolen by a bank they were entrusting with their funds. Thank goodness that’s not going to happen anymore.
As Cleveland.com reports, there are a few exceptions when money still can be seized:
- Money owed to the U.S. Treasury, such as for back taxes or student loans.
- Child support payments owed to enforcement agencies, not private collectors.
- Money owed to a bank if it also holds the deposit account that can be frozen. This might include money owed for overdraft fees or unpaid credit card bills.