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September 24, 2007
FDIC Tells Congress: Garnishment of Consumer Bank Accounts Containing Social Security Funds Is A Problem
FDIC General Counsel Sara Kelsey addressed the Senate Finance Committee on "The Impact of Garnishment on Social Security Benefits." FDIC recognizes that Federal benefit payments are an important -- and often the sole -- source of income for many Americans. Actions that limit access to these funds can result in hardship and expense for the benefit recipients. Banks usually freeze deposit accounts when they receive a garnishment order, even if the account contains Federal benefit payments.
Under federal law, the following types of federal benefit payments are protected from garnishment or attachment by creditors: Social Security benefits, Supplemental Social Security benefits, Veterans Administration (VA) benefits, civil service retirement benefits, military retirement annuities, and railroad retirement benefits. Many state laws conflict with this protection. Banks, out of caution, freeze the funds and wait for a hearing to sort out the legal status of the funds.
Most benefit payment recipients are unaware of this legal protection from garnishment. FDIC is engaged in an awareness campaign on this issue.
FDIC also suggests that Congress might address this problem by amending the Social Security Act to spell out the extent to which protections for federal benefit payments extend to freezes as well as garnishment, and whether these protections operate as a bar to banks or merely a defense for benefit recipients. Congress could also address the problems that arise from commingling federal benefit payments with other funds.
Link to Testimony: http://www.fdic.gov/news/news/speeches/chairman/spsept2007.html
(ag) Sept. 24, 2007, in Consumer Protection, Deposit Regulation, FDIC
September 24, 2007 in Consumer Protection, Deposit Regulation, Federal Banking Agencies - FDIC | Permalink
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I am a 65 year old single man living in Okeechobee live on SSI and a small pension from the state. A collection company on Jun/05/2008 filed a claim in county court and my bank account at National City Bank was frozen 100%, this account which contains only my SSI and my small state pension check was frozen on Jun/05/2008.
I have been without any means to buy food and my bills are being rejected for payment by the bank because of this 100% garnishment of my account, I have just found out that under Title lll of the Social Act this is not allowed in my situation. Under Title lll of the SSI ACT the most severe situation of dependent support only allows for a 60% garnishment of funds. My funds have been 100% frozen for ten days as of 06/14/2008.
After I informed the bank and the plaintiff’s attorney of Title lll of the SSI ACT he faxed a dismissal of garnishment letter on the plaintiffs behalf, they still would not release my funds and have held my funds frozen since 06/05/2008.
Numerous attempts to have someone from National City Bank to explain how they can freeze 100% of my account and ignore the plaintiff’s dismissal order have been to no avail they will not bother to call or answer my questions, each time I call and talk to some one they say they do not anything about this situation. I was given a customer support number to call, after I left a voice mail twice no one bothered to call and talk to me.
I found an online message forum from National City Bank and started leaving messages informing them of that the plaintiff had dismissed the garnishment and that the attorney for the plaintiff had faxed a letter of dismissal to them a day before my message. After three generic messages I finally received the following message:
Dear Clyde Harris,
Thank you for contacting us on June 11, 2008, regarding the legal hold on your account.
In order to assist you properly, we ask that you contact National City Special Services at 216-257-5825. We apologize for any inconvenience. Special Services representatives will be happy to assist you.
Online Banking Specialists are available Monday through Friday 7 a.m. to midnight ET, and Saturdays and Sundays from 8 a.m. to 9 p.m. ET.
We appreciate your business and thank you for contacting us. Visit us again at www.nationalcity.com or call us directly, 1-888-622-4932.
Anil Sharma - Online Banking Support
I called National City Bank Special Services number provided in this message and received a voice mail box. I left a message and no one contacted me to talk to me about this. I then received this message after a few more online messages to them:
Message Center
From: Online Banking Support
Date: 6/13/2008
Subject: RE: RE. Garnishment of my account
Dear Clyde Harris,
Thank you for following up with us on June 12, 2008, concerning your checking account.
We apologize if our previous response did not properly address your concern. Unfortunately, we do have to wait for the court and the attorney handling the case to send us an official release document. We apologize for inconvenience this may cause. We understand your frustration and apologize for the limited information we have available concerning this garnishment. Please do not hesitate to contact us in the future through this message center or directly at 1-888-622-4932.
Visit us again at www.nationalcity.com or call us directly, 1-888-622-4932. Online Specialists are available Monday through Friday 7 a.m. to midnight ET, and Saturdays and Sundays from 8 a.m. to 9 p.m. ET. We are closed on major holidays.
Adam Drugan - Online Banking Support
I than called the plaintiff’s attorney to enquire if he had sent an official dismissal from the judge, he said he assumed the order of dismissal from his client which he previously faxed would allow my funds to be released. I told him that they wanted a signed notarized order directly from the judge.
The attorney for the plaintiff right away faxed the judge and the Judge issued the notarized signed order that afternoon. A copy of the signed notarized court order was faxed to the plaintiff’s attorney, National City Bank and me. I even picked up the original signed notarized court order at around 3;50 PM. at the county court operations and took it right away to the National City Branch in Okeechobee where I bank and had the branch manager fax it again at about 4:10 PM. to the proper department to make sure my funds were released.
The National City Branch manager at Okeechobee even tried to contact someone on the phone for me to talk to about this situation and she got a voicemail box and no response back as we waited for about thirty minutes. She assured that they had received the faxed she sent as she waited for the tones of transmission of the fax.
This going on 10 days with no access to SSI or my state pension funds, my only source of income at present.
I am not on any medication, so that was not a problem I have been living on peanut butter, oatmeal, and eggs and a few can goods since then, luckily I had extra peanut butter and eggs.
My main concern is this could have happen to some one who like me lives alone and may have needed to buy medication or other critical items, or may not have had enough reserve to sustain themselves.
National City Bank seems to not care at all for their customers and seems not to know the law concerning SSI funds.
Posted by: Clyde Harris | Jun 14, 2008 11:39:48 PM
