Veterans and senior citizens are supposed to be protected from having their government checks garnished, except for matters involving child support, alimony, unpaid federal taxes and debts to other federal agencies. But creditors have been seizing the payments by getting court orders to freeze and garnish bank accounts that receive the benefits through direct deposit. Those victimized by the loophole have been rendered helpless, says the National Consumer Law Center, because they are often left with no money to hire a lawyer to fight actions by bill collectors.

 

According to the inspector general for the Social Security Administration (SSA), an estimated $178 million was garnished from bank accounts that included a mixture of Social Security benefits and other deposits from 2006-2007. More than 80% of the 51 million Social Security recipients get their payments through direct deposit.

 

Responsibility for closing the loophole falls to the Treasury Department, whose slow reaction to the problem has angered people on Capitol Hill. A Treasury official said the department has been working with the Department of Veterans Affairs and the SSA on a plan to stop the garnishing.

 

Having tired of waiting, Senator Herb Kohl (D-WI), chairman of the Senate Special Committee on Aging, introduced legislation this week that would halt the VA and Social Security offices from promoting their direct deposit programs until the Treasury Department issues its new rules.

-Noel Brinkerhoff