Federal law protects federal benefit payments—such as Social Security
benefits, Supplemental Security Income benefits, Veterans' benefits, Federal
Civil Service retirement benefits, and Federal Railroad benefits—from
garnishment orders and the claims of judgment creditors subject to certain
exceptions, such as garnishment orders relating to alimony or child support
Creditors and debt collectors are often able to obtain orders from state courts
garnishing funds in a consumer's account. These state garnishment orders may not
specifically address the issue of exempt funds.
To comply with state court garnishment orders, financial institutions often
place a temporary freeze or hold on an account upon receipt of a garnishment
order. The freeze can cause significant hardship for the account holder.
The agencies have developed this proposed guidance, which includes best
practices, to encourage financial institutions to minimize the hardships on
federal benefit recipients and to do so while remaining in compliance with
The FDIC requests comment on the proposed guidance and answers to the questions
contained in the Federal Register Notice on or before November 27, 2007.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Compliance Officer
Federal Benefit Funds
Deposit Account Fees
Deposit Account Management
Proposed Guidance on
Garnishment of Exempt Federal Benefit Funds - PDF (PDF Help)
Senior Policy Analyst Patricia I. Cashman at PCashman@FDIC.gov or (202) 898-6534
Counsel Mark Mellon at MMellon@FDIC.gov or
Karen Currie, Examination Specialist at Kcurrie@fdic.gov or (202) 898-3981
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be obtained via the FDIC's
Public Information Center (1-877-275-3342 or 703-562-2200).