WASHINGTON–On the eve of a Senate Finance Committee hearing held today, the federal financial regulatory agencies yesterday issued a request for public comment on a statement encouraging federal financial institutions to follow best practices to guard against garnishment of protected federal benefit payments.
Federal law prohibits garnishment of federal benefit payments, such as Social Security and veterans' benefits, for garnishment orders. Among the best practices proposed when a garnishment or is received were to notify the consumer promptly when the order is received and a freeze is placed on the account; provide information on the exempted federal benefits; promptly determine is an account contains only exempt funds; and notify the collector or court that the account contains protected funds, among other things.
NCUA and the other federal financial regulators issued the proposed guidance with a 60-day comment period.
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