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Certain Federal benefit payments are exempt from garnishment. However, there has been no reliable means by which a bank is able to know which funds that have been deposited into an account are Federal benefit payments. Banks are caught between the competing interests of the accountholder (who expects the bank not to honor a garnishment order) and creditors (who expect the bank to honor the court's instructions). Thus, banks have no choice often except to place a hold on an account and let the debtor and creditor resolve the dispute. However, this can result in hardships for the payment recipient, who often needs the payment to live on.

Questions? Please contact Shaun Kern or Nessa Feddis for more information.