On May 29, the Treasury Department, Social Security Administration, Department of Veterans Affairs, Railroad Retirement Board and the Office of Personnel Management issued a final rule on the garnishment of accounts containing federal benefit payments. One of the significant revisions that may impact credit unions is related to the definition of “garnishment order” which has been revised to include a levy issued by a state, state agency, or municipality.
There was an example in the preamble to the final rule that addresses the account review process as it pertains to the structure of credit union accounts (member number with additional suffixes for savings, checking, money management accounts, etc.). The preamble indicates that the account review only applies to the “sub account (and not the “master account”) that is subject to the account review and look back.” Therefore, if your member receives federal benefit payments to their checking account suffix, that is the only suffix that would require the account review.
Other revisions include an exception to the prohibition against charging or collecting a garnishment fee after the date of account review, if funds other than benefit payments are deposited to the account at any time within 5 business days following the date of the account review.
The MCUL has prepared FAQs on this topic that can be found here.
The final rule will be effective on June 28, 2013 and can be found here.