Did you know that Social Security and VA benefits are generally protected from garnishment to pay a debt to a private person or company? Most debt collectors can’t garnish money in your bank account to pay a debt.
You can download a CFPB fact sheet from the Consumer Advisory: http://www.consumerfinance.gov/blog/consumer-advisory-your-benefits-are-protected-from-garnishment/
Here’s how the federal protection works:
- Banks must automatically check your account history to see if Social Security or VA benefits were direct-deposited to your account in the last 2 months.
- If so, your bank must protect 2 months’ worth of benefits in your account and let you use that money.
- If your account has more than 2 months’ worth of benefits, your bank can freeze the extra money.
Consumers can also use a new sample letter to tell a debt collector that their Social Security or VA benefits are protected from garnishment.