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New Rules Prevent Garnishment of Veterans’ Benefits

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Advocate for the Disabled
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April 19, 2010 - A loophole currently exists that allows debt collectors to freeze bank accounts in order to seize veterans' benefits. In an effort to stop this behavior, the Obama administration has proposed a new set of rules published by the Treasury Department.

Banks have been at the mercy of unclear rules speaking to when bank accounts can be frozen in the first place. Because of the rules being clouded as they are, there are many instances of bank accounts being unfairly frozen creating undeserved problems for veterans relying on that money for their existence.

Despite current laws, creditors have been using court orders to garnish bank accounts receiving veterans' benefits via direct deposit. Federal laws currently in place protect veterans' benefits from being seized by creditors with few exceptions:

  • Child support;
  • Alimony;
  • Unpaid federal taxes; and
  • Debts to federal agencies.

 Many veterans rely on their veterans' disability payments as their only income on which to survive, so having their accounts frozen presents many undue hardships. To contest the garnishment order, veterans will have to go to court. With no money available, however, hiring legal representation can be difficult.  

Should the proposed rules pass, banks would be forced to review all garnishment orders to determine when, and in what amount, the bank account being affected by the garnishment order received the veterans' benefit deposit. It is hoped this will create a safe harbor provision protecting banks from liability following a garnishment. It is hoped these proposed rules will prevent any more undue issues for those veterans relying on their rightfully owed benefits.

Category: Veterans' Disability

4 Comments to "New Rules Prevent Garnishment of Veterans’ Benefits"

what is the U.S. code protects disabled veterans from a garnishment from creditors ?
Thank you.
Roger Joe
Posted by Roger Joe on October 22, 2012 at 01:32 PM
Had my account frozen once back in 1985 or so. I am on here now trying to find some concrete anchor my argument in. My bank just came out and said to direct deposit my checks by 01 Dec. or they would not cash my checks. I am trying to put together a letter to give to the bank showing them where they cannot use the proceeds of my account to pay creditors. I think I have it nailed down if I can only get them to act on it. I found the Federal Statutes that cover it, and the Code of this state prohibits it in plain language. It is either that are pay the buzzards 3 per cent of cashing my checks. Ain't it a hard row to hoe? See ya'll later. Barnacle Bill.
Posted by Bill on November 1, 2010 at 06:46 PM
Judges overstepping. A veteran's observation.

How can state court judges waive away disability rights, and arbitrarily award as alimony or, as in other cases just take, a portion of a veteran’s disability rated compensation, determined on a case-by-case basis of a veteran’s whose disability rating that maybe, is factored in as critical? Title II of the ADA provides that "no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity." §12132 (2000 ed.). The entity being the VA, and the State court judgments as if all disabilities are exactly the same? State court judges are overstepping those whose authority it belongs, in the practice of medicine, reevaluation, and rehabilitation of the veteran. The law is quite clear, along with violating the canons of standard conduct for judges, violating “Authority for schedule for rating disabilities.” 38 USC 1155, "..., in no event shall such a readjustment in the rating schedule cause a veteran's disability rating in effect on the effective date of the readjustment to be reduced unless an improvement in the veteran's disability is shown to have occurred.”


I now wondered, if state court judges are allowed to take away a veteran’s disability compensation without a medical license, or medical knowledge, how does the Board of Veterans Appeals, who are continually faced with determining a veteran’s disability, or other medical claim, adjudicate these medical questions?


§ 20.101 Rule 101. Jurisdiction of the Board.
“(b) Appellate jurisdiction of determinations of the Veterans Health Administration. The Board's appellate jurisdiction extends to questions of eligibility for hospitalization, outpatient treatment, and nursing home and domiciliary care; for devices such as prostheses, canes, wheelchairs, back braces, orthopedic shoes, and similar appliances; and for other benefits administered by the Veterans Health Administration. Medical determinations, such as determinations of the need for and appropriateness of specific types of medical care and treatment for an individual, are not adjudicative matters and are beyond the Board's jurisdiction. Typical examples of these issues are whether a particular drug should be prescribed, whether a specific type of physiotherapy should be ordered, and similar judgmental treatment decisions with which an attending physician may be faced.”
(Authority: 38 U.S.C. 511(a), 7104, 7105, 7108)

§ 20.901 Rule 901. Medical opinions and opinions of the General Counsel.
“(d) Independent medical expert opinions. When, in the judgment of the Board, additional medical opinion is warranted by the medical complexity or controversy involved in an appeal, the Board may obtain an advisory medical opinion from one or more medical experts who are not employees of the Department of Veterans Affairs. Opinions will be secured, as requested by the Chairman of the Board, from recognized medical schools, universities, clinics, or medical institutions with which arrangements for such opinions have been made by the Secretary of Veterans Affairs. An appropriate official of the institution will select the individual expert, or experts, to give an opinion.”
(Authority: 38 U.S.C. 7109)

Even the Social Security Administration… has medical evidence standards they must follow.
42 USC 423 “In making any determination the Commissioner of Social Security shall make every reasonable effort to obtain from the individual’s treating physician (or other treating health care provider) all medical evidence, including diagnostic tests, necessary in order to properly make such determination, prior to evaluating medical evidence obtained from any other source on a consultative basis.”

As veterans’ all know too well , state court judges, as incompetent as they are in the knowledge required to determine medical necessity and procedures, upon eyeing a veterans VA disability compensation, as alimony, the standards of judicial jurisprudence, and laws are totally ignored.
Posted by haiki on September 20, 2010 at 11:13 AM
Recently had my account taken by the courts because of creditor garnishment, where can I read the rules that apply to it being illegal for banks or courts to garnish my VA and Social Security Payments Which just happened in the past few days. Thanks, K.M.Harp
Posted by Mark Harp on June 3, 2010 at 08:59 PM

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