Social Security’s New Rules on Creditor Garnishments

As a Social Security Attorney in Ft. Lauderdale, Boca Raton and West Palm Beach, I am frequently asked whether Social Security Disability Benefits may be “garnished” or seized by creditors. Currently, one receiving Social Security Disability Benefits is protected from creditors. A new rule was published in the Federal Register, which became effective on June 28, 2013.

Prior to this rule, creditors could obtain garnishment order in secret, without the creditor or the court having knowledge as to whether the account contained protected federal benefits. To comply with the order, financial institutions might temporarily freeze the account. Until the matter was resolved in Court, Social Security beneficiaries might temporarily lose access to their SSD funds.

The new rules set forth procedures and rules for financial institutions to follow, to protect recipients of Social Security Disability, including those who receive their benefits on a prepaid card.

Following is a summary of the new procedures:

1. The financial institution must determine whether the garnishment order was obtained by the United States or a State child support enforcement agency (who are not impacted).

2. Next, the financial institution must must notify the account holder within two (2) days regarding the protection from garnishment that applies to the exempt funds.

An account holder must have “full and customary access” to the protected amount of funds in an account
Ft. Lauderdale Social Security Attorney and Lawyer Randy Zeldin, Esq. is available for consultation on matters relating to Social Security Disability claims.