Garnishments of Federal Benefit Payments

Question 1

True/False: Banks are required to examine accounts subject to garnishment to identify federal benefits paid by Treasury check.

Answer 1

False. The Federal Benefit Payment Garnishment Rule only applies to ACH payments of federal benefits, such as social security, supplemental security income, veterans benefits, railroad retirement benefits, and civil service retirement.

Question 2

What is the lookback period for the Federal Benefit Payment Garnishment Rule?

A. 6 months
B. 3 months
C. 2 months
D. 1 year

Answer 2

C. 2 months

Example: If you receive the order on the 15th of the month, you’re going to look back to the previous two 14ths of the month. So, that’s your two-month period. So, it’s not the previous two calendar months, it’s the previous two months, that’s going to be your lookback period.

Question 3

Does the Federal Benefit Payment Garnishment Rule allow for federal payment protections against child support garnishments?

Answer 3

No, federal benefit needs are not protected above child support needs. If an SSI benefit receiver has a garnishment for child support accompanied by a “Notice of Right to Garnish Federal Benefits”, then the child support amount must be garnished without removing the amount of federal benefit payments.

Question 4

Does the Federal Benefit Payment Garnishment Rule allow for federal payment protections against IRS garnishments?

Answer 4

No.

If the creditor is federal government or a State child support enforcement agency and submits a “Notice of Right to Garnish Federal Benefits”, these creditors have rights that trump general protection from garnishment. You must garnish funds with no protected amount.

Question 5

In cases of public benefit payees that are subject to garnishment orders, what amount must be available to the cardholder?

A. The lesser of the sum of ACH and check federal benefit payments over the prior two months, or the current balance.
A. The lesser of the sum of ACH state benefit payments over the prior two months, or the prior day’s closing balance.
A. The higher of the sum of ACH federal and state benefit payments over the prior three months, or the current balance.
D. The lesser of the sum of ACH federal benefit payments over the prior two months, or the current balance.

Answer 5

D. The lesser of the sum of ACH federal benefit payments over the prior two months, or the current balance.