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Senators Request Investigation on Illegality of Garnished Senior Benefits

Press Release

Location: Washington, DC

Senators Request Investigation on Illegality of Garnished Senior Benefits

U.S. Senators Max Baucus (D-MT), Herb Kohl (D-WI), and Claire McCaskill (D-MO) sent a letter to the Social Security Administration's Inspector General asking him to investigate an increasingly frequent but prohibited method of collecting debt from senior citizens, veterans, and the disabled.

With increasing frequency, financial institutions are garnishing accounts on behalf of creditors in order to recover debt owed to them, and are assessing fees on bank accounts into which Social Security, Supplemental Security Income (SSI), and Veterans benefits are electronically deposited. Although federal law prohibits anyone from garnishing these benefits, financial institutions are using this troubling practice. 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.

"In recent months several newspapers have published articles describing how financial institutions have been freezing and assessing fees on accounts in which Social Security and Veterans' benefits are electronically deposited," the letter read. "Sadly, the majority of the individuals to whom this is occurring are those who can least afford it."

Despite clear protections in federal law against attachment and garnishment of Social Security, SSI and Veterans' Benefits, banks continue to freeze these safety net funds on behalf of creditors and sometimes for their own purposes. In most cases theses funds are taken not only by the creditor but also by the bank who levies fees for "processing" the garnishment.

Additionally, as a one two-punch to America's seniors, veterans, and disabled citizens, overdraft charges from insufficient funds that resulted from garnished benefits are also being withdrawn. Some banks also dip into these protected funds to pay for other debts owed to the bank, such as a car loan.

Baucus, Kohl, and McCaskill requested that the Social Security Administration's Inspector General report to them the degree to which large and small banks are engaged in these practices and the extent to which the resulting fees are eating up the safety net funds upon which seniors, Veterans and the disabled rely.

"Millions of seniors rely on their Social Security benefits as their only source of income for basic needs like housing and food. When financial institutions and creditors illegally garnish these benefit checks, they are putting the lives of our most vulnerable segment of the population at risk. We need to know how wide-spread this practice has become and find a way to make it stop," Kohl said.

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