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Valley Grandma · Mar 27, 2008, 08:05 AM

Can my bank take overdraft charges out of my Social Security Disability payment direct deposit without my concent? I know SSD payments cannot be garnished or levied, except in very specific situations; however, my bank tells me they intend to take a minus balance in my account out of my SSD direct deposit, even if it gobbles up my entire direct deposit. Can they legally do that?

Thank you!

ScottGem · Mar 27, 2008, 08:07 AM

Yes. When you opened the account, you agreed to pay fees if certain things occur. If you incur an overdraft, then they have the right to charge you for it and take those funds from your account. Even if the source of those funds is disability payments.

Valley Grandma · Mar 27, 2008, 12:40 PM

Thank you, Scott. Not the answer I had hoped for, but at least now I know!

Fr_Chuck · Mar 27, 2008, 04:25 PM

Yes Scott is very correct. These are merely fees that are part of the agreement you have with the back.

yruohk · Apr 23, 2008, 11:42 AM

Can the bank take insufficient funds charges from SSI/SSDA direct deposits? I Googled this and found that courts across the court favored the recipients of SSI/SSDA direct deposits. If anyone can provide any definitive info regarding NSF/OD fees placed against direct deposits of benefits, I would appreciate it.

Only an excerpt gotten when Googled. This is only one case but there are dozens online through searching.

The Lopez case, which was decided on March 14, is technically "binding authority" only in the western states that are part of the Ninth Circuit - not including Oklahoma. (Oklahoma is within the jurisdiction of the federal Tenth Circuit Court of Appeals in Denver.) For jurisdictions outside of the Ninth Circuit, I am sure this case will be cited quite frequently in arguments; and before very long, lower courts outside of the Ninth Circuit will begin to follow it. One position your bank could take is that this case does not apply in Oklahoma yet, so you prefer to ignore it until it does apply here. However, it's probably best to start making changes to put your bank in compliance with this case's ruling.

The case, Lopez v. Washington Mutual Bank, Inc. concludes that if a bank account has a negative balance resulting from paying overdrafts and overdraft fees, the bank cannot apply a future direct deposit of Social Security or V.A. benefits to make up the deficit balance owed to the bank.

The court analyzed Sections 407(a) and 1383(d)(1) of 42 U.S.C. which prohibit creditors from reaching Social Security or SSI benefits by levies, garnishments, or "other legal process," and decided that these sections do not allow a bank to apply a future direct deposit of Social Security and SSI benefits to cover overdrafts and overdraft fees owed by the customer to the bank on that same account!

tomterm8 · Apr 23, 2008, 02:03 PM

The use of the words "social security" suggest you are in the UK. Under English common law, you have the right of first appropriation on payments for basic uses such as buying food, paying rent etc. You must exercise this right before the money goes into your account.

This is not the case, AFAIK, in America.

yruohk · Apr 23, 2008, 04:03 PM

BTW...what is AFAIK?

No, not in the UK. Live in NY, USA.

I did find SSI Law pertaining to garnishing funds right on the government site for social security benefits.

Guess that applies to taking of any funds from a bank account where the Supplemental Security Income is directly deposited into. I think this applies to both SSI and Social Security Disability benefits. If anyone has legal knowledge, please interpret this. Does Federal Agency mean banks? And if so, does that mean they can collect OD/NSF, overdraft/insufficient funds fees?

Social Security Act §207 protects Social Security benefits from assignment, levy, or garnishment. However, the law provides five exceptions:

Section 459 of the Act (42 U.S.C. 659) allows Social Security benefits to be garnished to enforce child support and/or alimony obligations;

Section 6334 (c) of the Internal Revenue Code (26 U.S.C. 6334 (c)) allows benefits to be levied to collect unpaid Federal taxes;

Section 3402 (P) of the Internal Revenue Code allows beneficiaries to elect to have a percentage of their benefits withheld and paid to the Internal Revenue Service to satisfy their Federal income tax liability for the current year;

The Debt Collection Act of 1996 (Public Law 104-134) allows benefits to be withheld and paid to another Federal agency to pay a non-tax debt the beneficiary owes to that agency: and

The Tax Payer Relief Act of 1997 (Public Law 105-34) authorizes the Internal Revenue Service to collect overdue federal tax debts of beneficiaries by levying up to 15 percent of each monthly payment until the debt is paid.

The Social Security Administration's responsibility for protecting benefits against legal process and assignment usually ends when the beneficiary is paid. However, once paid, benefits continue to be protected under section 207 of the Act as long as they are identifiable as Social Security benefits using normal banking practices. For example, only social security benefits are deposited into a particular bank account.

If a creditor tries to garnish your social security check, inform them that unless one of the five exceptions apply, your benefits can not be garnished. You also may want to provide this same information to your financial institution and seek legal assistance if you believe it is needed.

NOTE: Supplemental Security Income payments cannot be levied or garnished.

Fr_Chuck · Apr 23, 2008, 04:36 PM

Fees that are legally due a bank for its service and agreed to by the person who opened the account are not garnishments, They are fees due because the person wrote checks without money in the account.
Paying the OD fees would seem a much better idea than having the bank sue for fraud or perhaps sue for their rights under the contract of the bank account.

I would wonder why someone would first write bad checks, then expect not to have to pay that penality.

I am sure they will find the bank closing their account and most likely they would find thierself not able to open another one, with outstanding bad check charges to a bank.