Federal benefits are not eligible for garnishment
About a year ago, a new law went into effect which protects federal benefits from attempts at garnishment by credit card companies and other creditors. While this law is extremely helpful for Georgia residents that receive veterans’ or Social Security benefits, it comes with a fairly long list of qualifiers and requirements. As such, it is important to understand the law’s fine print in order to avoid an unexpected garnishment.
When banks receive a garnishment order, they must review the bank account in question before complying with the order. If the account contains federal benefits, then the bank may not allow those funds to be garnished. Protected benefits include Veterans Affairs, Social Security, Supplemental Security Income, Railroad Retirement, Railroad Unemployment Insurance, Civil Service Retirement System or benefits from the Federal Employees Retirement System and the Office of Personnel Management.
However, there are some additional qualifications that accounts must meet in order to be protected from garnishment. The federal benefits must be directly deposited into the bank accounts. If they are manually deposited, they will not be eligible for protection. Similarly, if funds are transferred between accounts (from a checking to a savings, for example), the transferred funds will not be protected.
In addition, banks must only look back at the past two months when determining how much of the account to protect. For example, if they see from the account records that the accountholder has received $400 each month for the last two months, they must only protect $800 from garnishment. Any excess funds in the account may be garnished.
There are other details in the law that could affect your federal benefits and your bank account. An experienced wage garnishment attorney can help ensure that your money remains in your account where it belongs.
Source: Bankrate, “Feds protect VA wages from bank garnishment,” Steve Bucci
