KOHL-MCCASKILL BILL SPURS GOVERNMENT TO RESOLVE ISSUE OF ILLEGAL GARNISHMENT OF SS BENEFITS
WASHINGTON, D.C. - Today U.S. Senators Herb Kohl (D-WI), Chairman of the Senate Special Committee on Aging, and Claire McCaskill (D-MO) introduced the Illegal Garnishment Prevention Act, a bill that would prevent the U.S. Department of Treasury from promoting the use of direct deposit for Social Security beneficiaries until they put a stop to the illegal garnishment of government benefits from the bank accounts of private citizens. With increasing frequency, financial institutions are garnishing or freezing funds on behalf of creditors from bank accounts into which Social Security, Supplemental Security Income (SSI), and Veterans benefits are electronically deposited, despite clear protections in federal law against the garnishment of such benefits. Many older Americans rely on Social Security benefits to pay their rent, buy groceries, and afford prescription drugs. For twenty percent of seniors over 65 years old, Social Security is their only source of income and for two-thirds
it is the major source of income.
"There are several advantages, both to the government and the recipient, in taking advantage of direct deposit. But it's not right to spend taxpayer money to encourage seniors to sign up for a program that will leave them open to illegal freezes and garnishment. This bill is an important step in getting the agencies that regulate our banks to recognize this widespread problem and start enforcing laws that protect our most vulnerable seniors," Kohl said.
"With our economy struggling, more and more seniors are relying solely on Social Security checks in order to afford the bare necessities. Garnishment jeopardizes their ability to stay afloat. We need to put a stop to it before more seniors are affected," McCaskill said.
In August 2007, Kohl, McCaskill, and Senator Max Baucus (D-MT)
sent a letter
to the Social Security Administration's Inspector General asking him to investigate the increasingly frequent but prohibited method of collecting debt from senior citizens, veterans, and the disabled. The
SSA-OIG released the results of their investigation
last July, which found that for the twelve largest banks during a 12-month period beginning in September 2006, more than $1 million was garnished from accounts that contained only government benefits, and more than an additional $29 million was taken from accounts in which exempt funds were comingled with other funds.
The garnishments accounted for in the report only represent part of the story. Many more beneficiaries are able to avoid garnishment after their account is frozen by filing an appeal through the local court system. Unfortunately, many seniors struggle to survive while waiting for the courts to reinstate access to their exempted funds, which often serves as their only source of income. Some banks have also been found to dip into these protected funds to cover other debts owed to the bank, such as a car loan. Many older Americans rely on Social Security benefits to pay their rent, buy groceries, and afford prescription drugs.
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