Garnishment of Accounts Containing Federal Benefit Payments Flashcards
In which of the following cases is a notice required to be sent to the accountholder upon receiving a garnishment order related to his account?
a. The account had a $500 Federal benefit payment deposited 3 weeks earlier and the account balance is now $700
b. The account has never had a Federal benefits deposited into it and the current balance is $400
c. The account had a $500 Federal benefit payment deposited 3 weeks earlier and the account balance is now -$27
d. The account last had a Federal benefit deposited into it six months prior to the order and the current balance is $250
a. The account had a $500 Federal benefit payment deposited 3 weeks earlier and the account balance is now $700
The account has a balance that is required to be protected—the $500 benefit payment. In the other alternatives, there was either no balance in the account, or no benefit payment made within the prior two months.
The Bank received a notice of garnishment on John Doe’s account. There is a balance of $530 on the date the notice was received. Two weeks prior to the receipt of the notice, a direct deposit of $750 was deposited into Mr. Doe’s account representing his monthly benefit from the Social Security Administration. Which of the following actions is now permissible for the bank?
a. Follow its normal garnishment procedures
b. Process Mr. Doe’s pending insurance ACH payment
c. Assess its normal $25 garnishment fee
d. Transfer the account balance to a holding account pending the garnishment resolution
b. Process Mr. Doe’s pending insurance ACH payment
Since the amount in Mr. Doe’s account is protected (it’s less than a benefit payment made within 2 months of the receipt of the garnishment order) he must be allowed full access to the funds.
The Bank received a notice of garnishment on one of their consumer deposit accounts. What is the first thing the bank should do?
a. Conduct an account review to determine if there have been any Federal benefit payments
b. Follow their usual garnishment procedures
c. Notify the account holder
d. Examine the order for a Notice of Right to Garnish Federal Benefits
d. Examine the order for a Notice of Right to Garnish Federal Benefits
This action must be taken first. If there is such a notice, then the normal garnishment procedures may be followed. If not, the account review must be conducted.
Prior to taking any action related to a garnishment order, and no later than __ business days following the receipt of the order by a financial institution, the institution must examine the order to determine if the Federal government or a State child support enforcement agency has attached a ____________________.
2
Notice of Right to Garnish Federal Benefits
If a Notice of Right to Garnish Federal Benefits is attached, then the financial institution must _________________.
follow its usual procedures for handling garnished accounts
If the Notice of Right to Garnish Federal Benefits is NOT included with the notice of garnishment, then the financial institution must __________________.
perform a review of the “lookback period.”
What is the “lookback period?”
Review of the transactions that occurred on the account within the last 2 months.
If, during the lookback period review, there were no federal benefits that were deposited into the account, the financial institution should ____________________.
follow its usual procedures for handling a garnished account.
If, during the lookback period review, there were federal benefits that were deposited into the account, the financial institution must ____________________.
act to protect those benefit payments by calculating the protected amount, identifying excess amounts (if any) and sending a notice (if deposits were made in excess of protected amounts and there is a balance on the account).
What is the “protected amount?”
The lesser of:
- The sum of all benefit payments posted to an account during the lookback period
- The balance in the account when the account review is performed.
What are a financial institution’s responsibilities when there are multiple accounts that are garnished?
Perform a lookback review and calculate the protected balance for each account.
When must notice be sent to an accountholder during a garnishment?
The notice must be sent in cases where a benefit payment was deposited during the lookback period and the account balance was above zero on the date the account review and the financial institution established a protected amount, and there are funds in the account in excess of the protected amount.
When must the garnishment notice be delivered to the customer?
Within 3 business days from the account review date
What are the financial institution’s responsibilities regarding fees and protected amounts?
The FI may not charge or collect a fee against the protected amount. The FI may charge or collect a fee up to 5 business days after the account review if funds other than a benefit payment are deposited to the account with this period, if the fee does not exceed the amount of the deposited funds.
How long must records must records be retained for garnishments?
2 years from the date the FI receives the garnishment order.
