Legal Protection of Accounts Where Federal Benefits Are Deposited
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Federal Law protects bank and credit union accounts where certain federal benefits are directly deposited from judgments for unpaid debt.
Benefits Creating Protection
Benefits from the federal government (all forms of Social Security benefits; Supplemental Security Income benefits; Veterans benefits; Federal Railroad retirement, Civil Service Retirement System benefits; and Federal Employee Retirement System benefits) extend automatic protection to the bank account where they are DIRECTLY DEPOSITED..
Amount of Account Protection
The protection created by deposit of a federal benefit is equal to the total amount of all benefits directly deposited in the previous two months. This protection applies to the account balance. This means funds from other sources (like pensions, wages, unemployment benefits) are also protected if they are deposited into the same account and do not bring the balance above the protected amount.
Account Protection Requires a Direct Deposit of Benefits
Please be aware — bank account protection ONLY applies to the bank account where federal benefits are directly deposited. This protection will ONLY be equal to two times the monthly deposit amount of your federal benefits. Private pensions, state government retirements, and any other form of retirement income that does not come from the federal government do not trigger bank account protection.
For Readers With More Than One Account
In case it is not clear, if you have multiple accounts, any other account that does not have federal benefits directly deposited into it is at risk of a bank garnishment/levy once a judgment has been entered.
If you have multiple accounts at the same bank, ONLY the account where federal benefits are directly deposited is automatically protected by federal law. If you transfer funds from a protected account into a different account at the same bank, you will lose automatic protection for these funds. To maximize the protection of your federal benefits, keep them in the account where they are directly deposited.