A debt collector must file a lawsuit and obtain a judgment against you for the amount you owe before they can begin to collect Social Security or VA benefits. Next, in order for your bank or credit union to release funds from your account or prepaid card, the debt collector needs to obtain a court order. This is called garnishment.
Using direct deposit to deposit funds into your account or prepaid card will ensure that your federal benefits are legally shielded from being halted or garnished. To have federal benefits loaded onto a prepaid card or directly deposited into your bank account, you can register at any time.
No, your bank account cannot be frozen due to Social Security deposits. Federal laws shield Social Security benefits from debt collectors’ garnishments and other actions. However, there are a few exceptions to this rule:
- Child support: Social Security funds can be garnished to pay child support obligations.
- Federal taxes: Social Security funds can be garnished to collect unpaid federal taxes.
- Defaulted federal student loan payments: Social Security funds can be garnished to collect defaulted federal student loan payments.
- Alimony: Social Security funds can be garnished to pay alimony obligations.
- Restitution to a crime victim: Social Security funds can be garnished to pay restitution to a crime victim.
Additional Protections for Direct Deposit of Social Security Benefits
If you receive your Social Security benefits through direct deposit, you have additional protections against garnishment. Under federal regulations your bank must protect two months’ worth of Social Security funds that are directly deposited into your account. This means that even if a judgment creditor obtains a garnishment order, your bank cannot freeze more than two months’ worth of your Social Security benefits.
Example:
Let’s say you receive $1,000 in Social Security benefits each month. For the previous six months, you have been receiving your benefits by direct deposit. Your bank account has a balance of $3,000. A judgment creditor obtains a garnishment order against you.
In this situation, your bank must protect $2,000 of your Social Security benefits. This means that the bank can only freeze $1,000 of your account balance. You will still have access to the remaining $2,000.
How to Protect Your Social Security Funds
The best way to protect your Social Security funds is to use direct deposit. This will ensure that your benefits are automatically protected from garnishment. If you do not use direct deposit, you should be sure to transfer your Social Security benefits into a protected account as soon as possible.
What to Do If Your Bank Account is Frozen
If your bank account is frozen due to a garnishment order, you should contact a lawyer immediately. A lawyer can help you to assert your exemptions and get your account unfrozen.
Additional Resources
Social Security funds are generally protected from garnishment. However, there are a few exceptions to this rule. If you are concerned about your Social Security funds being garnished, you should contact a lawyer.
As long as I am using direct deposit, which federal benefits are protected?
Money you receive and direct deposit to your account or card from the following government programs is protected:
- Social Security benefits
- Supplemental Security Income (SSI) benefits
- Veteran’s benefits
- Civil service and federal retirement and disability benefits
- Servicemember pay
- Military annuities and survivor benefits
- Federal student aid
- Railroad retirement benefits
- Financial assistance from the Federal Emergency Management Agency (FEMA)
Using the courts to release money after garnishment
If your bank garnishes or freezes money in your account, you must be sent a notice of garnishment. The notice explains the court procedures for claiming exemptions from garnishment and getting your money released.
A judge determines whether or not to release your funds to the debt collector based on a variety of criteria, including your income source and any applicable state or federal exemptions.
It is very important for the judge to know that your money comes from Social Security, SSI, VA, or other federal or state benefits before the judge decides whether your money should be turned over to the debt collector. You should notify the court, the bank, and the person or business that is garnishing your account immediately in writing, and seek help from a lawyer .
Banks Freeze Accounts And Deny Access To Your Money | Something Big Is Coming
FAQ
Who can freeze your bank account?
Can Social Security check your bank account?
Can a bank account with Social Security be garnished?
Can a bank put a hold on a Social Security check?
Can a bank freeze Social Security benefits?
If your account has more than two months’ worth of benefits, your bank can garnish or freeze the extra money. For example: If you receive $1,000 in Social Security benefits by direct deposit each month, and you have $3,000 in your account, the bank can turn over $1,000 of the $3,000 to a debt collector.
Can a bank freeze your account if you overpay Social Security?
If a bank receives a garnishment order from the court for either of these two exceptions, they can freeze your account. While Social Security can garnish your benefits if they determine an overpayment was made, they can’t freeze or get access to the funds that are already in your bank account.
What happens to SS Benefits when a bank account is frozen?
Therefore to the extent that SS benefits are directly deposited into a checking account, they may be affected. When a bank account is frozen, this means that a debtor cannot withdraw any money from the account. After a set period of time, usually 60-90 days, the money is then paid to the creditor.
Can Social Security be seized from a bank account?
Federal law now prevents the seizure of Social Security benefits from bank accounts. In addition, Social Security itself does not have the authority to order bank garnishments. However, if you are the subject of a fraud investigation, this may lead to criminal charges and a court judgment that you owe the agency money.