For many seniors, veterans, and disabled individuals in Georgia, government benefits such as Social Security, SSI, and veteran’s benefits serve as their lone source of income. Most of them receive these benefits each month via direct deposit into their checking and savings accounts. This money is then used for basic necessities so that they may live independently.
Federal law clearly prohibits creditors from attaching or garnishing these government benefits (with the exception of the IRS, child support, and alimony). 42 U.S.C. 407(a). However, banks continue to ignore federal law and freeze and garnish these funds on behalf of creditors. Banks then assess the customer a garnishment processing fee ranging from $75 to $200 and assess other related fees for bounced checks or non-sufficient funds in the account.
In 2008, per the request of United States Senators Baucus, Kohl, and McCaskill, the Inspector General of the Social Security Administration completed a report on this issue after investigating twenty-five financial institutions. Over a one year span, nineteen of those banks had garnished accounts containing only Social Security funds for a total of nearly $1.1 million and twenty of those banks had garnished accounts containing Social Security funds and other deposits for a total of about $29.3 million. In the total sample, the banks garnished $30,379,490.00 from 7.85 million beneficiary accounts. Further, the banks collected over $1 million in garnishment processing fees. Based upon this sample, the report estimates around $177.7 million in total garnishments for the entire U.S. population. Read the Full Report HERE.
The effect on these customers is devastating as they are unable to pay for food, medical expenses, electricity, water, and housing. Many individuals in this situation are unaware of the legal protections, and for obvious reasons, can’t pay a private attorney’s retainer fee to further advise them. The emotional and physical stress of the situation will worsen the health of many who are already ailing. Additionally, their credit score will be affected and they will be required to pay fees from other creditors for late fees and returned check fees.
Legal aid attorneys can help protect these individuals through consumer education and litigation. Banks will only begin changing their policies once they are held accountable for their actions under the already-existing federal law.
— By Mike T., a legal services lawyer in Macon, Georgia