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Loophole lets bill collectors seize Social Security payments

Joel Davis

Contributor

Posted by Joel DavisJune 06, 2007 2:55 PM

Tags: General Personal Injury

1 Comment

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Federal law prohibits creditors from garnishing Social Security disability and veterans' benefits payments to cover bad debts, but the practice is pretty widespread as a recent article from The Wall Street Journal revealed.

But at banks like Wachovia and others, the standard practice is to freeze the customer's account when a garnishment order is received.

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Posted by Mark
June 11, 2007 3:11 PM

The bank or the collector should inform Social Security recipients that their funds are exempt. The other (obvious) solution is to switch to receiving these exempt payments by check.

The additional fees charged by the banks makes me think that the banks and collectors have gone too far in their pursuit of payment when it comes to debtors with exempt fund sources like Social Security.

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