Q: Can a person on SSI disability have it garnished?

A: Federal law says that many federal benefit payments like Social Security benefits, Supplemental Security Income benefits, Veteran’s benefits, and Railroad Retirement benefits are not subject to garnishment. This means that these funds are exempt and you may be able to stop your creditors from taking these exempt funds from your bank account. However, there are some exceptions. For example, your Veteran’s benefits, Social Security, or other government benefits may be garnished to pay delinquent child support, alimony, federal taxes, or other specific kinds of debt.

The types of state benefits subject to garnishment and those that are exempt vary from state to state. You may want to contact an attorney or the consumer protection bureau in your state for more information.

An “interim final rule,” which would protect federal benefits from being taken by creditors, is open for public comment at the Treasury Department. This new treasury rule will take effect on May 1, 2011.

The new rule will require banks to determine whether there are protected funds in an account when it receives a restraining notice related to a garnishment. If the account has protected funds in it, the bank is required to protect two months of benefit payments from garnishment or a freeze. Although federally exempt assets have been exempt from creditor garnishment in the past, the creditor can no longer send a garnishment order to the bank in order to freeze the assets up the debt amount. In the past, this has caused beneficiaries much pain and agony because they could not access urgently needed funds.

Although the federal rule will only protect federally exempt assets, it is designed to place the burden on the bank, in the first instance, rather than forcing the consumer to object to the freeze and have to actively seek a release of assets