WASHINGTON — Bill collectors are exploiting a legal loophole to take Social Security and veterans’ benefits even though federal law is supposed to protect the payments from creditor seizure.
The Obama administration now is promising action but has offered no timetable for developing the new rules.
Federal law has long protected Social Security and veterans’ benefits from most creditors, with a few exceptions for child support, alimony, unpaid federal taxes and debts to other federal agencies. But creditors have been seizing the payments by getting court orders to freeze and garnishee bank accounts that receive direct deposits. Over a 12-month period in 2006-2007, an estimated $178 million was garnished from bank accounts that included Social Security benefits, the administration’s inspector general said.
Sen. Herb Kohl, D-Wisc., chairman of the Senate Special Committee on Aging, and other lawmakers have introduced legislation that would stop further promotion of the direct deposit programs for Social Security and veterans’ benefits until the Treasury Department issues rules to protect the benefits from creditors.
by the associated press
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