Got this e mail back from my Credit Union about protected funds

[DYLAN150]

After sending my credit union two emails and a letter, I finally get an answer from them.

This is what I sent them:I currently have an account with the credit union. I have been told by my family attorney that my Gov't funds, (social security and Veterans disability) are protected funds. In other words if these funds are not co mingled with other funds or deposits, creditors can't garnish or levy my account. I Request the credit union to mark these funds as protected funds.

This is their reply:
You are correct in part that these types of deposits are exempt, except for the fact that until May 1,2011 the Credit Union does not have the authority to not hold funds in any account when a Garnishment, Levy or Order to Withhold is received. We are considered a third party and if funds are not held by us, we become responsible for the complete balance due.

We must hold the funds and the member must prove to the Garnishor that these are exempt funds. In these types of
cases we usually hold the funds from 20 to 45 days which gives the member the time to get in touch with the garnishor and they must send us a release..


Sure glad I change to paper checks to my home.

[shark66]

Good thing you asked...

But what's supposed to happen on May 1st, 2011? End of the world as we know it? Or some piece of legislation going into effect? That's what I would like to know...

The best of luck to you.

[DYLAN150]

This may have already been posted:

New Treasury Rule Protects Social Security, VA, Other Federal Benefits

National Consumer Law Center Advocate Applauds New Rules



WASHINGTON, D.C. – A federal rule issued today that strengthens protections for bank accounts used to collect federal benefits is welcome news for retirees, veterans and disabled persons, according to a lawyer for the National Consumer Law Center.



The “interim final” rule, which will take effect on May 1 but is still open for public comment, will limit creditors’ ability to freeze and take funds from accounts that contain Social Security, Supplemental Security Income (SSI), VA and other federal benefits. These benefits, which are legally protected from court-issued garnishment orders, are critical to the survival of many recipients.



“We applaud the work of the Treasury Department and the other agencies to safeguard these essential benefits, and the leadership of Sen. Max Baucus on this issue,” said Margot Saunders, an attorney with the Center. “All too often, elders, veterans, and disability benefit recipients who rely on these benefits for their basic needs have been unable to access them for extended periods because of creditor-imposed garnishment freezes.”



Social Security, Supplemental Security Income (SSI), VA, and similar federal benefits are intended to meet beneficiaries’ daily needs. Federal law makes these funds immune from seizure by creditors.



But in practice, creditors frequently obtain court garnishment orders so that banks then freeze bank accounts containing protected funds. A beneficiary may be unable to access urgently needed funds for weeks or months. Often, the paperwork and procedures needed to end an illegal freeze prove too daunting for a recipient, so that a bank turns over supposedly “untouchable” funds to a creditor.



The new rule prohibits the practice of denying beneficiaries access to these essential funds in bank accounts. It requires all banks to determine whether an account contains protected funds. If an account contains protected funds, the bank is required to protect two months of benefit payments from garnishment. Protection of more than two months of benefit payments requires additional court filings by the beneficiary.



In announcing the rule, the agencies stated that its framework could be expanded in future years to protect other federal payments such as military retirement.

[WhatMoney]

The new law was posted as a Sticky on Feb. 26 in the Exempt Funds thread:

http://www.bkforum.com/showthread.ph...062#post502062

and I answered some questions about the law here:

http://www.bkforum.com/showthread.ph...676#post502676

Also, before the Federal regulations were published I explained to Dylan why his Washington state funds were not protected, only exempt:
http://www.bkforum.com/showthread.ph...676#post502676

His credit union's reply just repeated this - but it is encouraging that they are aware they will need to change their policy on freezing exempt funds after May 1, 2011.

Note that depositing a social security check into your account will not be protected - you must use direct deposit.

[GoingDown]

Good thing you asked...

But what's supposed to happen on May 1st, 2011? End of the world as we know it?

No, that's not until the end of the Mayan Calendar in 2012.

Or some piece of legislation going into effect? That's what I would like to know...

The best of luck to you.

...

I'm going to put a link to this thread in the sticky thread above called "Exempt Funds".