Q: I'm jobless, sinlge mom of two, only source of income is the VA disability. Can the creditor garnish my income?
A:
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.
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