The U.S. Treasury issued a new regulation set to take effect on May 1, 2011 that would help protect consumers who have had judgments entered against them. Specifically, the new rule provides automatic protection from garnishment for bank accounts containing certain federal benefits including Social Security, Supplemental Security Income (SSI), VA benefits and similar benefits.
These benefits are already generally exempt from garnishment from judgments entered by the courts of Florida and other jurisdictions. However, in practice, this garnishment exemption is not strong enough. That is because judgment creditors often garnish such funds, meaning that the bank removes the money from the consumer’s bank account. Then, it often takes weeks or months for a consumer to challenge the exemption and get the money back. This means that the most vulnerable consumers (including the elderly, the disabled and veterans) often lack the money to pay next month’s rent, needed medications or other necessary expenses of daily living. Sometimes, the process of claiming an exemption and getting the money back through the necessary legal maze and court hearing is too confusing and intimidating, and the consumers simply give up. This allows debt collectors to keep money they were not entitled to seize in the first place.
The new law changes all that. Now, the banks in which accounts containing these exempt funds are held must determine whether any of the money is exempt under the new regulation before they even seize the money. If the source of the money is exempt as Social Security, SSI or VA benefits, then the bank must leave at least two months of the income in the account. That way, the consumer has enough money to last while he or she challenges the garnishment in court.
Although there are many more ways in which the government can strengthen existing laws against abusive debt collectors, this new regulation is a good start and can mean all the difference in the world to the most vulnerable consumers. If you are being garnished, these exemptions or many others available under Florida law could protect you.