The Obama Administration has proposed new rules intended to protect those receiving federal benefits from having the benefits illegally seized by debt collectors or seeing their bank accounts frozen. Currently, state and federal laws exempt these benefits from garnishment, attachment and from court orders obtained by debt collectors. However, in practice, upon receipt of a court order, banks may freeze a recipient’s account that contains the directly deposited benefits, often depriving a recipient of their main source of income. Most benefit recipients are uncertain of their rights and do not have the resources to hire counsel to assist them
The proposed rules have been applauded by the National Consumer Law Center. The NCLC states that the proposal provides a solution to a flaw in the banking system that has financially strangled vulnerable seniors and others receiving federal benefits.
Ohio Attorney General Richard Cordray has joined other state attorneys general to support the new rules. If the rules are implemented, recipients of Social Security, Supplemental Security Income, Veterans and other federal government benefits will have greater protection to ensure that these funds are available for their basic needs.
The proposed rules can be found in the Federal Register.
Let your opinion be heard. Ohio State Attorney General Richard Cordray wants your comments on the proposed Garnishmet Rule. Comments will be accepted until June 18, 2010.