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Garnishment Regulation Changes

Mon, Jun 3, 2013

Washington, District Of Columbia

The Treasury's Fiscal Service, Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and Office of Personnel Management have adopted an amendment to the regulation governing garnishment of certain Federal benefit payments that are directly deposited to accounts at financial institutions. The new final rule, Garnishment of Accounts Containing Federal Benefit Payments (31 CFR Part 212), is effective June 28, 2013.

The rule establishes procedures that financial institutions must follow when they receive a garnishment order against an account holder who receives certain types of Federal benefit payments by direct deposit. The rule requires financial institutions that receive such a garnishment order to determine the sum of such Federal benefit payments deposited to the account during a two month period, and to ensure that the account holder has access to an amount equal to that sum or to the current balance of the account, whichever is lower.

The Agencies are revising the definition of garnishment order to include orders or levies issued by a State or State agency or municipality. To remove any doubt as to whether the rule applies to restraining orders, the Agencies are amending the definition of garnishment order to include "an order to freeze the assets in an account." With regard to the question of whether a "garnishment order" includes an order issued by the clerk of the court or an attorney acting in his or her capacity as an officer of the court, it was not the Agencies' intention that an order "issued by a court" be so narrowly construed as to exclude such orders. The Agencies' view is an order issued by the clerk of the court or an attorney acting in his or her capacity as an officer of the court in accordance with State law constitutes an order issued by the court. Lastly, the Agencies did intend by removing the phrase "to enforce a money judgment" from the definition of "garnishment" in the interim final rule to ensure that the rule is not limited to civil money judgments.

Source: MCUL