RULES PROTECTING FEDERAL BENEFITS
Sept. 15, 2013
A regulation, published in the Federal Register on April 19, 2010, at 75 FR 20299 will stop banks and other creditors from seizing federal benefits deposited into a bank account. If the regulation goes into effect it will expand protected benefits to include not only social security and SSI but VA benefits, federal railroad retirement benefits, Civil Service Retirement benefits, and Federal Employees Retirement System benefits.
Banks will be required to review the deposits into an account to determine whether the deposits are of a protected class. This will prevent creditors from seizing balances in a bank account and creating bank charges for overdraft or bounced check charges. Frequently bank customers have not known they could require the release of the funds due to federal exemptions.