U.S. Treasury seeks to protect federal benefits – WSJ

April 14 (BestGrowthStock) – The U.S. Treasury department will
release new rules on Wednesday that would prevent banks from
seizing a borrower’s social security to recover unpaid debt, the
Wall Street Journal said.

The proposed new rules, to be published in the Federal
Register, will require banks to check if the borrower has
received any direct deposits of federal benefits within the past
60 days, the Journal said.

In case the borrower had received a federal benefit then the
new rule would require the banks to establish a protected amount
equal to the sum of the benefits deposited, the paper said.

For example, if a person had two federal benefit deposits of
$1000 each, then the banks must establish a protected amount of
$2000, even if the person had spent the benefits, the Journal
said.

Any amount above the protected amount would be handled
according to the garnishment rules of each state, the newspaper
said.

Garnishment is a debt collection practice that involves a
bank seizing the assets of a borrower in case the debt remains
unpaid.

The U.S Treasury could not be immediately reached for
comment by Reuters outside regular U.S. business hours.
Investing Research

(Reporting by Sakthi Prasad in Bangalore )

U.S. Treasury seeks to protect federal benefits – WSJ