What's New: Garnishment of Exempt Funds Rules

A new federal regulation that is intended to protect Federal benefit payments held in deposit accounts from the reach of creditors will impose significant new requirements on financial institutions. The rule, which became effective on May 1, 2011, established procedures banks must follow with respect to garnishments and limits the ability of banks to freeze or restrain bank accounts in which certain federal benefits have been paid by direct deposit.

For further information, please refer to the Legal Processes chapter of The Gold Book  and new sub-section, Garnishments.