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New Rule Would Regulate Account Freezing for SSA Funds Recipients

The United States Treasury department is working to close a loophole through which recipients of Social Security Administration (SSA) funds have been inconvenienced by creditors.

Currently, a federal law prohibits creditors from taking money out of the bank account of those receiving Social Security disability or retirement benefits. This rule does not stop some banks from putting a hold on recipient's account, even though no money can be removed.

According to The Wall Street Journal, many banks do not know what steps to take when they receive garnishment orders from creditors. They know they cannot remove funds received by the SSA, but sometimes it is unclear if the money in the account is all from disability benefit checks, or if some is from another income source, which would make it eligible to be garnished.

This causes some banks to put a freeze on the disability benefits recipient's account, which can result in fees for overdraft protection and bounced checks. If this occurs, the affected person can file an exemption claim to unfreeze the account, but it typically takes several weeks or even months to have access to the money again. This can be devastating to those living on a fixed income, such as those people who rely on disability benefits.

The new rules would require banks to find out whether the customer received a deposit from the SSA within the past 45 days before freezing the account upon receipt of garnishment orders. If they have, the bank must leave enough money available for basic necessities, such as food and rent.

If you or your loved one are suffering from a severe physical or mental disability, you should contact a Social Security Disability lawyer immediately to learn about your rights and determine eligibility. The process of securing Social Security Disability Insurance benefits and/or Supplemental Security Income (SSI) can be difficult and overwhelming. Don't go it alone! The disability lawyers at LaVan & Neidenberg, located in Ft. Lauderdale, FL understand the inner workings of the Social Security Administration and will help you navigate the system. Call us today for a FREE legal consultation - 1-888-234-5758.