By Attorney Mitch Adel
For years, Federal law has protected Federal benefits such as Social Security and Veterans’ Benefits, from being seized from bank accounts by creditors, with a few minor exceptions, such as child support, alimony or unpaid federal taxes.
Recently, however, due to the vague nature of such laws, creditors have found a way to force banks to freeze individual bank accounts where monies are directly deposited by programs such as the Veterans Administration. The unfortunate reality is that most recipients of these benefits rely on these deposits to pay monthly expenses. Freezing these accounts will result in many Veterans losing their VA benefits and creating an undue hardship.
In April, 2010, President Obama proposed new rules to close these loopholes and in recent days the Ohio Attorney General, Richard Cordray, has backed the proposal to protect these monies for the people who need them the most. If you would like to comment on this proposal please visit this site:
http://www.ohioattorneygeneral.gov/ProposedGarnishmentRule
For full details as to the potential problems and proposed changes please review:
Seattle Times – Creditors Use Loophole to Sieze Protected Benefits
